SIDE SUBHEAD

Everyone talks about them. But what do power marketers really look like?Power marketers do not just want to belong to the electric industry; they want to change it forever. Their future depends upon it.

Over 80 entities applied to become power marketers last year, and the Federal Energy Regulatory Commission (FERC) has acted on approximately half those applications so far. Yet only a handful of companies currently are actively engaged in buying and selling electricity. Many are merely positioning themselves for the day when competition inevitably pushes beyond the $70 billion wholesale power market into the $200 billion retail market.

This sudden interest in power marketing can be directly attributed to the landmark Energy Policy Act of 1992, which amended Section 211 of the Federal Power Act and gave FERC authority to order wholesale wheeling if certain criteria are met. (For key FERC cases affecting power marketers, see Inside Washington, page 35.)

Most applications come from gas marketers, who see power generation as a lucrative market. But the applicants include brokers and financial firms, utility affiliates, independent entrepreneurs, commodity traders and manufacturers, and independent power producers.Enron Corp. - From Gas to Energy

Last fall, Enron Corp. changed the name of affiliate Enron Gas Services Group to Enron Capital & Trade Resources (ECTR). The change is more than a formality, said Jeff Skilling, ECTR managing director.The old name became "too confining" for the evolving energy business. ECTR reflects the company's goal "to facilitate capital and trade in the underlying commodity," whether it be natural gas, electricity, or some other fuel.

That means providing full financial and risk management services as well as energy marketing. "We have no intention of entering the utility business," Skilling says. "Our business is as a facilitator."

Financial derivatives trading in natural gas now exceeds five to 10 times the physical market, and some industry analysts expect today's $200-billion electricity retail market to become a $1-trillion commodity power market by 2000. In the future, the risk of financing of new power plants will shift from ratepayers to the financial markets, according to Skilling.

ECTR is one of four operating companies under the restructured Enron Corp. umbrella. As a gas marketer, ECTR buys and sells 8 billion cubic feet (Bcf) per day in a total domestic market of about 50 Bcf. Long-term financial contracts involve another 12 Bcf per day. ECTR, which employs about 1,400 people worldwide, is the largest supplier of natural gas to the electric generation industry in North America, and is aggressively pursuing new ways of financing to the energy industry.

As interstate pipelines shed their traditional roles as gas merchants and became merely transporters, akin to common carriers, in the 1980s, Enron decided it wanted to be "a major player in gas marketing," Skilling said. To do that, Enron found it necessary to expand beyond its traditional pipeline markets. Today, Enron's largest regional gas market is the Northeast, although Enron's huge pipeline network serves the Midwest, West and South.

According to a study by Ben Schlesinger and Associates, the number of gas marketers skyrocketed