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Fortnightly Magazine - November 15 1995

lock in customer preferences and market share before electric deregulation takes its gloves off and creates a brand-new, dog-eat-dog energy services business.

We saw electric deregulation (em with retail wheeling, undundling, real-time pricing, and more competitive rates (em as starting up in earnest sometime during the three-year period from 1999 to 2001. That scenario would give gas executives about three years to get it together before taking on electricity as a full-fledged competitor. As several members of our group put it, "Gas needs a wake-up call."

Many of us thought the wake-up would come from a disaster (em a financial or market cataclysm that forces gas (and electric) executives to face the music. But one group member offered a compelling alternative. He predicted that, before long, a new industry mogul will put together a successful vision of what a mega-sized, integrated, pipes-and-wires, energy commodity and transportation company will look like in the future. Or an energy services marketer. In the past, it took visionaries like Theodore Vail, Henry Ford, and Ted Turner to remake entire industries. Why should energy markets prove any different?

By the way, we all predicted that the natural gas and energy industries would solve the greenhouse problem by 2010. So we can stop worrying about global warming. But you still might get run over by a glacier.


Energy FuturesLooking Back from 20101996-1998

. Retail gas unbundling (starts in CA, IL, & NJ)

. Widespread real-time, end-use gas metering (industrial/commercial)

. First NYMEX electric COB contract

. Gas-to-gas mergers (pipes & commodity players)

. First friendly gas/electric mergers

. PUHCA repeal/reform

. Legislative support for NGVs

. Improved AC/refrigeration gas technologies

. Pipeline bottlenecks removed

. Onsite electric generation grows

. National energy brands emerge

. Widespread outsourcing

. Labor Union concessions1999-2001

. Gas cooling technologies build load

. LDCs form alliances w/equipment manufacturers

. National brands proliferate

. Cost breakthrough on end-use gas metering (residential)

. Electric deregulation, retail wheeling, real-time pricing intensifies competition w/natural gas

. Electric RTGs, RINs, EBBs mature

. First hostile gas/electric mergers

. Gas marketers acquire/join vertical companies

. First mega-sized ESCO

. Insurance for telecom, water, home energy service, and appliances

. Wall Street finances w/o franchises

. Most LDCs out of gas-supply business2002-2004

. Breakthrough in fuel-cell technology

. National brands for energy services

. Five mega-ESCOs control 60% of market

. Multiple commodity swaps (gas/electric/other)

. Gas storage hubs in full use

. LDCs perfect technology for online monitoring of distribution systems

. Electric recover stranded costs; rates fall

. Regulators accept smaller role (safety monitoring; complaint resolution)2005-2010

. Baby boomers demand consumer safety net

. Complex mergers (AT&T/PG&E/Time-Warner)

. New industry mogul emerges, successfully commercializes energy/telecom "black box" for interactive "smart house"

. Energy industry solves "greenhouse" gas problemSource: Consensus of group of 20+ energy industry executives, representing Wall Street analysts (1), state PUC representatives (2), managers at energy service and marketing companies (2), electric and gas distribution utilities (6), gas storage and hub operators (1), pipelines (1), trade and R&D associations (4), DOE and White House policy