Gas Executives' Forum

 

Experts discuss which strategies offer hope for cutting costs, creating a competitive edge, and meeting exploding demand. This article contains interviews with: Thomas J. Aruffo; Edward M. Kelly; and Michael Rutkowski and Chuck Beaver.

Gas.Com Inc? A Smokestack Industry Faces
the E-Future

Natural gas executives, according to analysts , are in a phase that Enron chairman Ken Lay described as the fifth of five stages of Internet awareness - beginning with ridicule and evolving to panic.

In late February, at Cambridge Energy Research Associates' annual conference in Houston, natural gas executives were openly concerned about being left behind by competitors who successfully adapt e-commerce to their businesses first. Industry analysts chalk up recent interest to several large e-commerce initiatives announced by energy companies last year.

For example, last year's rollout of EnronOnline, an Internet-based transaction system to buy from or sell to Enron energy-related products and other commodities, was an alarm that awakened many natural gas executives to the e-commerce revolution, say analysts. Furthermore, many big name oil majors such as ExxonMobil, Chevron, and Shell, and oil pipeline companies such as Colonial Pipeline, are developing vertical e-commerce markets and energy portals, each one a community of customers and suppliers brought together under one virtual roof.

Chances are where oil companies go, natural gas companies will follow, say experts. They say many of the commercial pipeline and exploration and production (E&P) e-commerce strategies adopted by oil majors can be easily adapted to natural gas. In the distribution sector, local distribution companies are weighing e-commerce options as they exit the merchant function and seek ways to cut costs as they become pipes companies.

Dean Liollio, president and chief operating officer at Entex - Reliant Energy's local gas distribution company - has another plan in mind. He intends to retain customers for a potential retail affiliate should competition heat up in Entex service territories of Texas, Louisiana, and Mississippi.

Customer retention in the future will depend on the proper combination of technology and human contact, according to Liollio.

"The key is using technologies such as e-commerce to enhance customer convenience and lower LDC operating costs, while maintaining human touch, with a storefront and a real person to talk to when a customer needs service or has a problem," he says.

"At the end of the day, LDCs that have this proper blend will develop customer appeal and be the supplier of choice."

To those ends, Reliant Energy in early March announced it had signed a three-year agreement with billserv.com Inc. to develop an electronic bill presentment and payment (EBP&P) system for the company's 1.6 million customers in the Houston area.

But beyond technology, Liollio believes it will be difficult for competitors to break past the strong relationship his company has built over the years with customers.

"In the natural gas business, we go into a customer's home. There is more emphasis on human touch. The customer is there and we interface with them. There is a certain comfort in knowing that your gas company employees are the people that have been