ENERGY SERVICE PROVIDERS ARE LISTED BY THE DOZENS on public utility commission Web sites, often with direct links to the companies themselves. Even so, picking out 10 to watch for their commercial and industrial activity isn't an easy task.

There's no reliable volume data. There's no organization rating the services each of these vendors offers. The ESPs themselves are either reticent about disclosing data or overly boastful. There's no ready apples-to-apples comparison of ESPs available for prospective C&I customers. Still, who is who among ESPs is a legitimate question.

This roundup, while in no way comprehensive, offers a look at leading ESPs - some picked for their geographic reach, others for their volume, and some, despite their small size, for the buzz their offerings have created in the marketplace among their peers and customers.

Chasing Margin, Not Share

AllEnergy Marketing Co. LLC, Waltham, Mass.

Ownership: A New England Electric System business unit.

Employees: 119, working in five New England states and New Jersey.

Business Volume: $70 million; includes natural gas.

Goal: To be profitable, not necessarily through market share.

Largest Customers: Would not disclose, but has less than 10 electric C&I customers.

Competitors: Exelon, Select Energy.

What Defines the Company: Selectivity in targeting power markets.

Company/Product Sketch: John H. Dickson, president and COO, says bluntly that his company is "trying to make money."

"I think that's one of the things you have to consider when you're looking at companies in this business," he says. "Are you in buying market share or are you in trying to make a profitable business? We could be selling a lot of electricity, as some competitors, if we want to buy market share and sell it at a loss."

Meanwhile, the company has found it can sell gas at a margin. It's building gas-side relationships, hoping later to sell electricity to those customers.

" We've been in business, probably actively only a year and we've got 15,000 [gas and electric residential and C&I] customers," says Dickson. "If we could keep that pace up and do it profitably, I think we'd be very comfortable."

He notes that the terrible margins have driven even the large players out of the New England market.

When possible, AllEnergy will win customers with three popular products: WeatherProof bill, PowerG and ReGen. The first product works like a budget bill, but there's no true up. The customer is told at the beginning of the heating season what the bill will be for the year. The company calculates the value of the hedge and lays off that risk. The Regen product builds off a utility's standard offer. AllEnergy contracts with a renewable energy supplier to build a new plant. The power is sold into the grid and AllEnergy makes up the difference between the sale price and the customer's contract price.

Eyeing the Big Guns

Commonwealth Energy Corp., Tustin, Calif.

Ownership: President/CEO Frederick M. Bloom is the primary, but less than majority, shareholder. There are 500 private shareholders.

Employees: 120, active in California, although the company is registered as an ESP in Rhode Island and Massachusetts.

Business Volume: 300 megawatts. Includes residential, commercial and industrial customers.

Goal: 1,000 MW.

Largest Customers: San Diego Association of Governments, California Department of General Services, St. Jude's Hospital Group.

Competitors: New Energy Ventures, PG&E Energy Services, Enron Energy Services.

What Defines the Company: Offers 12- to 18-month contract terms on commodity sales, typically shorter than competitors.

Company/Product Sketch: Hit big time when it won the SANDAG contract, worth about $36 million in gross annual billings, about a third of that for the commodity. Has guaranteed as much as 3.5-percent savings, depending on trading in the California Power Exchange. Now claims more than 500 industrial clients. Bloom says company is not yet in Enron's category, but, "We're working on it."

"We are planning on losing money, and any company that expected to start from scratch and make money in the first year [of competition] lives in a dream world," he says.

The company's offerings are primarily billing/metering and commodity products, although it plans to start supply- and demand-side management.

All of its deals are negotiated. Because it seeks short-term contracts with clients, there's more at risk when the pacts end. But the short-term contracts are appealing to customers because competitors offer the same rate for longer terms. "We believe that once we get in there and we've installed the meters and they're getting their savings, it's going to be a lot harder for them to change in midstream, despite the fact the contract might expire," Bloom says. Throwing caution to the wind, the company is prepared to earn long-term business through performance.

Bloom points out that to win 25,000 residential customers in California, he spent $1.5 million. Enron spent $10 million to win 30,000, he notes.

The company's next move is into Arizona and Nevada as those states deregulate in 1999.

A Happy Regional Player

Conectiv Energy Supply Group, Conectiv Enterprises Group, Wilmington, Del.

Ownership: Both are business units of Conectiv Energy.

Employees: More than 275, selling energy services and commodity in Maryland, Delaware, New Jersey, Pennsylvania and Massachusetts.

Business Volume: About $110 million (unregulated business).

Goal: To serve 20 percent of the Mid-Atlantic market.

Largest Customers: R.R. Donnelley & Sons, Bristol-Meyers Squibb, Hewlett Packard Inc.

Competitors: PP&L Energy Plus, Enron Energy Services, Exelon.

What Defines the Company: Its tariff-knowledgeable staff, plus bundled services that include telecommunications.

Company/Product Sketch: With the Energy Supply Group supplying its commodity, CEG's Conectiv Solutions provides oil, natural gas and electricity plus telecom services, HVAC, power quality solutions and metering. Despite this large offering, the companies have decided to remain regional.

M.Q. Riding, marketing manager for Conectiv Energy Supply, says clients seem happy with regional perspective, because they're splitting up energy management by region, despite their nationwide

locations.

"What we're starting to see is the larger Fortune 500 companies testing maybe three different entities in three regions ¼ one against the other," says Andrew Bakey, energy manager. "It's almost impossible to know everything that's going on in every single state and to know exactly every tariff."

The two Conectiv executives disagree on how much weight customers put on commodity versus service, but this is certain, says Riding: "We feel when we go in there as prepared as we can be and have these services available, we don't necessarily have to be the cheapest to win."

Three products receiving client attention are Enerwise, which allows customers to aggregate their loads through metering and the Internet; power quality improvement, which could mean new substations or capacitors or metering to maintain quality of LDC output; and telecom services, for smaller commercial users.

Conectiv is seeking long-term, quality relationships with clients. To win them, it will spend at least $1 million in advertising to crack the competitive Pennsylvania market. It hopes to offer at least an 8-percent energy savings to customers there. Customers elsewhere have averaged savings as high as 15 percent.

Next year, the company plans to target more businesses in Maryland, and those in Washington, D.C.; Rhode Island; Connecticut and New Hampshire.

Solutions Now, Commodity Later

DukeSolutions, Charlotte, N.C.

Ownership: A Duke Energy business unit.

Employees: More than 250, working in 20 cities and Canada.

Business Volume: Would not disclose; backlog of more than $1 billion in contracts, both for commodity and energy services.

Goal: To be a major player in the North American energy market.

Largest Customers: Kraft Foods Inc., First Union National Bank, Department of Defense/Department of Energy.

Competitors: Enron Energy Services, PG&E Energy Services, Sempra.

What Defines the Company: Desire for long-term partnerships that will allow it to tap its engineering and technology depth to solve complex customer problems.

Company/Product Sketch: Focuses on North America, but Charles L. Watkins, DukeSolutions president, says, "We'll go anywhere." And it will do so by offering targeted solutions, only later adding commodity sales. Company believes energy services market is worth about $300 billion, 90 percent of that in non-commodity services, says Watkins.

On bundled offerings, company says its C&I customers save between 10 and 30 percent on energy bills.

"We're not in the low-cost commodity business," Watkins says. "The trend that we're seeing is that large end-use customers ¼ are increasingly dissatisfied with a commodity-only, low-priced solution. [T]hey've come to realize they're leaving tremendous dollars on the table relative to process efficiency, information and optimization of their plant assets."

Watkins thinks there still will be customers who buy commodity like a wholesaler, but the trend is heading in the other direction.

Of the company's customized solutions, three have received the most interest: (1) its productivity efficiency package, which optimizes energy inputs in manufacturing processes, wrapping the process equipment together and then financing it for customers; (2) EnfoTrak, which analyzes multi-site energy usage; and (3) transition electric services, which assist a relocating customer facing process changes to get the most from its new rates.

The company chooses to market business-to-business, with targeted direct-mail campaigns to end users. Up through 1999, it plans to roll out more commodity capability as part of its product bundle. By April, it hopes to open six more offices nationwide.

The Big Gun

Enron Energy Services, Houston

Ownership: An Enron Corp. subsidiary.

Employees: 1,000, delivering commodity and services in more than 40 states.

Business Volume: Would not disclose; has signed about $1.5 billion in contract obligations through the first half of the year.

Goal: A dominant national market position.

Largest Customers: Pacific Telesis Group, California State University and the University of California, General Cable Corp.

Competitors: PG&E Energy Services, DukeSolutions, The Southern Co.

What Defines the Company: Its commitment to a deregulated marketplace as a comprehensive energy services provider.

Company/Product Sketch: Who doesn't know Enron? What ESP doesn't count the company as its competitor?

Marty Sunde, senior vice president of business development, says the company is trying to go beyond simply being a commodity supplier, to be a premier energy services outsourcer. If that means managing the mail room, count Enron in. At Mobil's world headquarters, they deemed taking care of the shoeshine concession just a "natural part of the outsourcing process" for Enron - believe it or not.

Company hopes to establish a presence "inside the box," much as Intel has with microchips. Is readily forging relationships with large property management firms like Coldwell Banker.

Enron focuses on businesses with multiple locations, the Fortune 5,000, and nine industry segments, including health care, retail distribution and manufacturing.

Its most popular products are in commodity management, asset management and capitalizing financial strategies. "Those three pillars are the basic product offerings we have, and we like to blend them together and take away the complexity of that for the clients," Sunde says.

He says Enron is spending in the single-digit millions to market its C&I business. Lately, it is spending more time on recruiting employees from other industries, such as investment banking or manufacturing, so that it can staff up with people who understand all facets of energy management.

Sunde believes there's an international market for comprehensive energy outsourcing. It will pursue that market on its way to four major goals: measuring and tracking client satisfaction, contracting dramatic growth that outpaces the industry, increasing operating effectiveness to boost revenues and building a motivated workforce.

Seeking a Niche

Exelon, Philadelphia

Ownership: Subsidiary of PECO Energy Co.

Employees: 250, active in Pennsylvania, Massachusetts, New Jersey, Delaware, Maryland.

Business Volume: $150 million in gross billings (doesn't include telecommunications business or its largest client).

Goal: 10 percent of national market.

Largest Customers: The Massachusetts Health and Education Facilities Authority, U.S. Steel Group's Fairless Works, McDonald's Corp.

Competitors: In commodity sales, Enron Energy Services, PG&E Energy Services, Duke Energy Trading and Marketing. In energy services, Johnson Controls, Honeywell.

What Defines the Company: Ability to combine energy commodity with energy services and telecommunications.

Company/Product Sketch: Preceded by three brand names - Horizon Energy, EnergyOne and Horizon Group - all with varied levels of success, Exelon now seeks to "be the easiest company for customers to deal with," says Gregory A. Cucchi, Exelon president. It wants to do that by offering multiple services, first to commercial-industrial clients and then through those clients to their employees.

That's the route it plans to take with the Massachusetts HEFA contract, worth $115 million in gross annual billings. The deal introduced its name to 125,000 HEFA workers. It hopes to take the same approach elsewhere, especially in Pennsylvania, where the competitive market began rolling out in July.

Exelon wants to "revolutionize the way customers access, use and manage energy and information," Cucchi says, beyond "old standard" services that boost energy performance or improve procurement. Provides energy performance services internationally, doing business in Canada, Europe, Asia and India.

C&I customers will be offered direct computer access so they can benchmark their utility bills and do business online. "Our intention is to roll that down, as it becomes more available, to other markets as well," says Cucchi.

The company also offers on-site energy services, such as it did for U.S. Steel, piping in methane from a landfill to power an 11-megawatt, low-emissions cogeneration plant. In a communications venture with AT&T Wireless, Exelon is building PCS and digital cellular networks, using its own infrastructure. The telcom services will be sold to large and small commercial users.

Emerging From the Midwest

Illinova Energy Partners, Oak Brook, Ill.

Ownership: Subsidiary of Illinova Corp.

Employees: 110, working in 11 states.

Business Volume: Less than 300 MW of retail power.

Goal: To serve as much as 5 percent of the national market.

Largest Customers: General Motors of North America, Hughes Electronics, University of Washington.

Competitors: Honeywell, Enron Energy Services, New Energy Ventures.

What Defines the Company: It recognizes that the best energy solution may not be its own and will tell customers so.

Company/Product Sketch: Company hopes to build electric C&I customers by leveraging its retail gas business. Conversely, hopes to build gas customers from its electric business, primarily in West and Midwest. It will do all this while selling more than 3,000 MW of wholesale power and supplying more than 800 million cubic feet of wholesale and retail natural gas.

Illinova Energy Partners' retail gas-electric split runs about 50-50, with more gas sales in Midwest and more electric in West and Northwest. Was one of first to provide retail electric in Montana. Doesn't see much market opportunity in Southeast and South; will focus on the Southwest.

Besides selling commodity, company offers software products and project management and engineering solutions to help customers use energy more efficiently. GM uses a package called EQ Service Bureau that audits and pays bills at more than 200 of its plants.

"We also act as a supplier to commercial and industrial customers through some alliances we've established with some municipals like Santa Clara, California," says David W. Butts, Illinova Energy Partners president.

Although he says no one has as complete an array of offerings as his company, he also notes the company doesn't push one offering. "We're vendor-neutral in terms of equipment and actually vendor-neutral on commodity," Butts says. "Obviously we can provide that commodity if the customer would like, but we have - and would - recommend an alternative supplier."

He says the company's first solution is to listen. Its goal is long-term relationships. By listening and offering solutions - wherever those solutions come from - Butts is confident his company can become a national market player.

A Growing Goliath

New Energy Ventures LLC, Los Angeles

Ownership: Half-owned by management; remaining share by MEH Corp., a UniSource Energy Corp. subsidiary.

Employees: 150, delivering electricity in California, New York and Pennsylvania. Targeted regions: New England, the Midwest, Arizona, Nevada, New Jersey and Maryland.

Business Volume: 1,500 megawatts, close to $1 billion in gross billings by year's end.

Goal: To be the nation's largest energy service provider.

Largest Customers: U.S. Department of Defense, Ralphs Grocery Co., Hughes Aircraft.

Competitors: PG&E Energy Services, Enron Energy Services.

What Defines the Company: High-volume, low-priced commodity products.

Company/Product Sketch: President/CEO Michael R. Peevey claims that in California, company is largest energy service provider. NEV claims as many as 35 percent of customers who have switched in the C&I market. In New York, it claims 32 percent of the over-1,000 MW market. It has as much as 10 percent of market in Pennsylvania and expects to pick up more customers there in 1999.

Its C&I base has come at a price. NEV has spent undisclosed millions on advertising and marketing.

There are only three competitors on a national scale, Peevey insists. "We want to be in every market as a leading player," he says. "If not the leading player, the second player." The only regions it will avoid are those that have no competition, such as the Southeast and the Rocky Mountain states.

Its products include shared-savings commodity sales, where it commits to beat an index such as California's power exchange. Customers are seeing savings higher than 10 percent, depending on usage and load profiles. More typical are single-digit percentages. NEV also offers a fixed-price product.

Energy services, such as equipment and supplies, will next year include a new offering: 75-kW micro turbines. "I think you're going to see service options providing more of a marketing edge as we go forward," Peevey says. "At the present time, [the market] is still largely price driven." The industry will benefit from this development because margins on energy products are larger than those on commodity, he says.

A Market Leader

PG&E Energy Services Corp., San Francisco

Ownership: An unregulated subsidiary of PG&E Corp.

Employees: More than 400, delivering commodity and services in 23 states.

Business Volume: Would not disclose. Reportedly has contracted $2 billion worth of multi-year pacts over the past year.

Goal: To be market leader in California and among the top three energy service providers nationally.

Largest Customers: McDonald's Corp., Lucky Stores ($300-million contract), Rite Aid Inc. ($120-million contract).

Competitors: Enron Energy Services, the Duke companies, Johnson Controls.

What Defines the Company: Its desire to build customer relationships over time.

Company/Product Sketch: "We don't see ourselves as offering a line of products," says John Chamberlin, senior vice president. "Our primary product is an integrated financial and physical solution for customers. What that means is custom solutions that attempt to maximize the financial value of a set of things that surround energy to the customer."

The company's targeted C&I customer base is the Fortune 1,000. It offers financial services, risk management products, energy management services, power quality services and strategic services. Greatest opportunity seen in energy management, power quality, risk management and asset monetization.

Says Chamberlin: "The key to our success is putting a bundle together for a customer, which really focuses on financial opportunities. That's partly why I resist talking about sort of a typical product line. I think most of us in the business are doing similar things with the individual parts of the potential sale."

Scott W. Gebhardt, company president and CEO, has said that the corporate hierarchy is willing to take a $100-million net income loss to fund employment rosters, new offices, ads and marketing and product development. "It's [a lower figure] than what the competitors are spending," Chamberlin notes.

But the national market, as he sees it, is moving quickly, so the investment doesn't come too soon. "Delivering an integrated set of values to customers is really difficult and I think a lot of people talk about it ¼ the test of that is whether or not we're able to build a relationship with a customer and build that value over a long period."

The Customer's Middleman

Xenergy Inc., Burlington, Mass.

Ownership: A subsidiary of NGE Enterprises Inc., an unregulated subsidiary of New York State Electric & Gas Corp.

Employees: 200, supplying services in California, Massachusetts and New Hampshire.

Business Volume: 200 MW, $30 million in estimated gross billings; revenues are about $40 million annually across all business lines.

Goal: To supply consulting, engineering, information technology and energy supply services throughout its target markets.

Largest Customers: The Massachusetts High Tech Council, The Massachusetts Office Supply Division.

Competitors: Strategic Energy Partners Ltd., National Energy Choice, New Energy Ventures.

What Defines the Company: Its record of understanding how to analyze energy usage information and how to present information to energy suppliers.

Company/Product Sketch: Though registered as an ESP in several states, Xenergy doesn't sell energy commodity. Its Energy Supply Services business unit consults on how to "package" electric and gas bills.

"We're an agent," says James Ferro, senior vice president. "We don't sell direct. We go out and find [energy] for you."

Xenergy tries to help clients understand what their risk factors are. Are they willing to take more risk on for a lower price? It examines what it can do with equipment to position clients for a better rate. Ultimately, clients' packaged bills interest suppliers because they can understand load shapes, power factors and other issues.

Company also conducts rate analysis and rate negotiation. Claims to save clients an average of 14.5 percent on energy bills.

Ferro says the company's goal is to be profitable: "If we can be the agent to a couple hundred million dollars worth of energy supply a year in the early stages, that's a nice goal."

Xenergy recognizes that some markets don't allow energy services companies to make money. Although it registered as a Pennsylvania ESP, it chose not to do business there because "more people were losing money than making money" in an early pilot, Ferro says. "The idea of selling at a loss goes kind of against our grain."

Joseph F. Schuler Jr. is senior associate editor of Public Utilities Fortnightly.

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