"It's going to take a lost of time to understand all the pies."
It's almost spring. There's a new energy secretary(emisn't there? And at least for new electric restructuring bills in...
trading wholesale energy products. Almost all of that business was conducted by telephone and fax. Emerging wholesale energy exchanges for online trading provide traders with real-time access to critical information and the ability to trade 24 hours a day. The Internet's immediate liquidity, improved efficiency and reduced trading costs are drawing traders away from the phones.
Altra. Altra was one of the first metamediaries - that is, Internet platforms for bringing together buyers and sellers - to facilitate energy trading online.
"Our business model is integrating the transaction chain electronically so that transactions can be consummated online, managed online and settled online with a minimal level of human administrative work in the process," Braziel says. The company's Altrade platform offers a marketplace for natural gas liquids, crude oil and electricity. Altra serves all segments of the energy transaction chain, including producers, trading and marketing companies, and large end-users. About 1,800 energy traders use the system.
Braziel estimates that Altra facilitates up to 50 percent of all trades for natural gas liquids in the United States. His goal is to achieve that level of saturation in other markets.
"It is complicated for buyers and sellers to find each other in the electric business, and it is particularly complicated to schedule transactions across systems where the buyers and sellers don't own the wires," Braziel says. The Altra system integrates the transaction so that if it is consummated online, it can be scheduled with systems Altra also offers. About 125 clients use Altra's risk management, scheduling and accounting software to manage the transactions, whether done online or the old-fashioned way.
HoustonStreet. While Altra is generally recognized as the leading natural gas exchange, the electricity industry is still up for grabs. HoustonStreet Exchange Inc. launched its first trading floor last June with an eye on the No. 1 position. HoustonStreet offers PowerPit, which allows "physical" traders to negotiate deal-specific terms and conditions. Users of SpeedWay, HoustonStreet's other option, trade blocks of 50-megawatt on-peak power for a period of one month, negotiating only price and the number of blocks.
Eighty-five companies, including eight of the top 10 power marketers, are trading on HoustonStreet's exchanges. The system is fully Web-based - no need to buy special software - and allows traders to conduct business just as they would by phone or fax, only faster and more efficiently, with access to news, weather reports, stock quotes and even sports scores on the trading screen.
HoustonStreet also plans an exchange for the trading of crude oil and refined products at the wholesale level, and may expand into natural gas and derivative products in the future.
"We want to be the premier site for Internet energy trading of all types of energy commodities, not just electricity," says Getman.
Competition among exchanges is likely to be fierce during the next few years. Getman says there is room for more than one electricity exchange but not as many as ten.
Essential.com. Essential.com, which bills itself as the Web's first energy and communications retail superstore, targets Web-enabled residential and small commercial