ESCos, Round Two: Fighting for Market Share

Fortnightly Magazine - September 1 1996
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How much will utilities invest

in energy service companies to boost earnings beyond the normal growth rate?Going on the "defensive-offensive."

In the early 1990s, flush with utility money from its corporate parent, Entergy Systems and Service, Inc. began expanding to provide competitive energy services.

Now called Entergy Integration Solutions, Inc., or EISI, the

Memphis, TN, company claims 815 employees and about 65 offices nationwide. The expansion appears extraordinary, considering that the company performs energy service contracting (em installing lighting, heating, and air conditioning and providing

maintenance services for small- to medium-sized commercial customers like convenience stores.

But there's more to the story.

In June last year, parent Entergy Corp., through a subsidiary, paid off $125 million in loans it provided to EISI's predecessor. Does that mean that the subsidiary actually grew the business by a like amount? It's hard to say, because EISI is an unregulated subsidiary, and releases limited financial information. Its executives, while helpful, won't discuss profits or losses.

But like other utilities and newcomers to the energy service company (ESCo) business, it appears that Entergy ate EISI's startup costs and still carries a healthy share of losses ... in hopes that red ink will someday turn black.

Hardly unique, this scenario will likely be repeated elsewhere en route to the new energy services world (em a world that bundles

supply- and demand-side services, and roots utility offshoots in what traditionally has been an independent ESCo market.

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