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News Analysis

Fortnightly Magazine - September 15 1999

telephone service as a minimum in a two-year contract, the company promises 10 percent off the standard offer rate for the generation and supply portion of the electricity bill. Customers of Boston Edison, for instance, through Essential.com would receive 10 percent off the utility's standard offer of 3.69 cents per kilowatt-hour, or 3.32 cents per kilowatt hour. Further, while local service charges remain the same, customers are locked in at 9.9 cents per minute for all long-distance service.

Referring to the wealth of marketing opportunities offered by the Web and other media, public relations director Joe Palladino says, "We're enabled by the Internet, which is a fairly new tool, and by deregulation, which is new. With the advantage of these two concepts, we're trying to come up with different ways to reach people."

As an example of the innovative marketing tactics used by Essential.com, its website promises customers who sign up entry in a drawing to win a year of free electric generation service or box seat tickets to a Red Sox game.

The sites and others like them are simple to use, assuming the customer knows they exist. By simply entering his zip code, a customer can begin the sign-up process. Unless he lives in one of the narrow areas served by the supplier, he will be met with a cheery message like Utility.com's: "Sorry, not there yet!" Then the customer may ask to be alerted by email when the supplier begins servicing his neighborhood. If the customer happens to live in an area that is serviced by the supplier, he can sign up for service in just minutes using a credit or debit card and information from his utility bill.

The sites compare favorably with similar, established Web portals offering gas service. WPS Energy Services, for instance, has been offering gas service on the Internet since late 1997 or early 1998, according to a spokesman. It serves unregulated markets in the Midwest. Customers of Columbia Gas, SEMCO, Wisconsin Gas, Consumers Energy, Michigan Consolidated Gas, and NICOR, can choose from between two to five pricing plans, including those with fixed and variable rates. The site also provides examples of what WPS customers have saved. WPS recently began offering electric service through the site to retail customers in Illinois, Pennsylvania and Maine.

Commodity Trading: Can

HoustonStreet Quell Resistance?

But the Internet is not only for the retail customer. Several websites for electronic trading in the $70 billion wholesale energy market have been established in recent years. An inherent advantage of the Internet is its inexpensive use compared to the costly dedicated lines that support such electronic trading platforms as Bloomberg Power Match. Although e-trading has proven to work well for the natural gas market, electricity trading on the Internet has been less successful. Concerns linger about security and privacy issues, site reliability and the lack of a paper trail to record trading terms.

Independent System Operator New England in May began operating a virtual trading floor via its website for New England's wholesale electric market. It ushered in the era of bid-based