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Frontlines

Fortnightly Magazine - March 15 2000

why utilities so far have failed to find the net.

IF E-COMMERCE CAN WORK FOR C&I , the best example might be Enron Online. That's the website where Enron offers to buy or sell energy for or on behalf of marketers, wholesalers, retailers or even large-volume consumers, and bundle it with transportation or transmission to deliver it as firm.

In essence Enron has created a new spot market that is double-blind to buyers and sellers. But Enron presumably can look inside, gaining insight into supply, demand, and price trends. It recalls the example of how American Airlines set up its "SABRE" system for airline reservations, which became the industry standard, and how the competing carriers complained that it conferred market power on American.

Some utilities may be attempting to set up similar spot markets to gather bids and offers from materials providers, just as U.S. automakers joined recently to create an Internet site to facilitate their dealings with parts suppliers and manufacturers. These ideas look neat but they won't put a dent in the retail mass market.

As I heard a utility executive say recently, "We have been fooling ourselves for years in thinking that we have been selling energy. That's not at all what we have been doing. We've been distributing energy."

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