Exhibit 99.466
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CALPX RETAILCO FEASIBILITY ASSESSMENT - FINAL PRESENTATION
June 26, 2000
AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER / SUPPLIER ANALYSIS
- CAPABILITIES / GAP ASSESSMENT
- TRACK 2 / COMPETITOR ANALYSIS
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RETAIL TRADING MAY PRESENT AN OPPORTUNITY
[BAR GRAPH]
ON-LINE ENERGY TRADING EXPECTED TO BALLOON
$ BILLIONS
1999 11
2000 30
2001 57
2002 101
2003 170
2004 266
NOTE: VALUES INCLUDE WHOLESALE AND RETAIL TRADING
SOURCE: FORRESTER RESEARCH
CURRENT INITIATIVES LEAVE ROOM FOR RETAIL PLAY
- --------------------------------OYSTER------------------------------------
INFORMATION
SERVICES TRADING SCHEDULING SETTLEMENTS CLEARING
| \ / \ /
| \ / \ /
| \ / \ /
| \ / \ /
| BLACK PEARL CLEARCO
|
|
|
|
------------- RETAILCO
- INFORMATION SERVICES
- RETAIL TRADING
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PROJECT MISSION AND OVERVIEW
RETAILCO OPPORTUNITY AS DEFINED ON APRIL 14, 2000
MISSION:
TO BE THE ELECTRONIC PROCUREMENT ASSISTANT FOR C&I BUSINESSES AND RETAIL
AGGREGATORS TO SOURCE AND FACILITATE DELIVERY (PROVIDE FULFILLMENT) OF
ENERGY AND UTILITY SERVICES
PRODUCTS AND SERVICES:
AUTOMATED RFP
- COMMODITY
- ESCO
COMMODITY SCHEDULING / FULFILLMENT
E-CONSULTING
- ANALYSIS AND RECOMMENDATIONS OF POWER OPTIONS
- INTELLIGENT BEST PRACTICES
- ECONOMIC ANALYSIS
- PORTFOLIO OPTIMIZATION
- RISK MANAGEMENT TOOLS
BUYER DESKTOP
- MARKET PRICING, NEWS, WEATHER, ETC.
- REGULATORY INFO
- GRID/OASIS
- MESSAGE BOARDS
PX / PSC PROJECT OBJECTIVES
TRACK 1:
VALIDATE THE FEASIBILITY OF THE DEFINED RETAILCO
TRACK 2:
UNDERSTAND AND ANALYZE THE E-COMMERCE COMPETITIVE LANDSCAPE
- POTENTIAL COMPETITORS
- POTENTIAL PARTNERS
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TRACK 1
RETAILCO FACES SUBSTANTIAL FEASIBILITY ISSUES
AREA FEASIBILITY COMMENTS
LOW NEUTRAL HIGH
| | | | |
SUPPLY CHAIN X o FRAGMENTING MARKET CREATING
OPPORTUNITY
CAC X o HIGH CAC: SOME EXCHANGE
MODELS MAY LOWER CAC WHICH MAY
ENCOURAGE SUPPLIERS TO SUPPORT
EXCHANGE
o INCUMBENT PLAYERS HAVE HUGE
ADVANTAGE (LOWER CAC, LOWER
SWITCH RATE, BRANDING,
RELATIONSHIPS)
CUSTOMERS X o CONCERNED WITH RELIABILITY/
QUALITY/HISTORY
o SHOW LITTLE PROPENSITY TO
CHANGE FIRST
o WANT SOLID COMPETITION FOR
BUSINESS
o SEE POTENTIAL, BUT NOT TAKING
CURRENT PLAYS SERIOUSLY
SUPPLIERS X o WORRIED ABOUT MARGINS
o NEED TO SEE EXCHANGE AS
OPPORTUNITY, NOT THREAT
CAPABILITIES X o PX/PSC CURRENTLY MISSES MANY
KEY REQUIREMENTS FOR THE
RETAILCO MODEL UNDER REVIEW
COMPETITION X o SPACE IS RELATIVELY CROWDED
W/ NEW ENTRANTS
o TRADITIONAL SUPPLIERS WON'T GO
"QUIETLY INTO THE NIGHT"
o COMPETITORS HAVE A HEAD START
ONLINE EFFORTS WILL STRUGGLE UNTIL THEY PROVIDE MORE THAN INCREMENTAL VALUE,
BUT DELIVER SOMETHING NEW AND COMPELLING THAT TRADITIONAL SUPPLIERS DON'T
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TRACK 1
WHAT EVENTS COULD CREATE A C&I "BURNING PLATFORM"?
o SOME CLEAR C&I EXCHANGE WINNERS WOULD HAVE TO EMERGE, WITH LINE OF
SIGHT TO PROFITABILITY
- WHY?
- WHAT ARE THEY OFFERING?
- ARE THEY BEATING OUT ESTABLISHED SERVICE OR SUPPLY RELATIONSHIPS
CONSISTENTLY?
o A WHOLE NEW VALUE PROPOSITION EMERGES FOR EXCHANGES THAT IS NOT
APPARENT TODAY
- TRANSFORMATION MIGHT BE RAPID
- UNLIKELY TO BE DEFENSIBLE FOR LONG
- INDUSTRY MAY DISMISS, UNTIL SUCCESS IS UNDENIABLE, RAPIDLY
ADOPTED TO PREVENT CUSTOMER LOSS
o C&I CUSTOMERS FORCE SUPPLIERS TO EXCHANGES
- C&I CUSTOMERS SEE SUBSTANTIAL FINANCIAL AND OTHER BENEFIT FROM
EXCHANGES
o COMMON RULES FOR DEREGULATION ACROSS ALL (OR MOST) STATES
- ALLOWS SCALE FOR NATIONAL PLAYS
- ELIMINATES ARBITRAGE
- FORCES CONSOLIDATION
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TRACK 2
TRACK 1 FINDINGS IMPACT TRACK 2 PERSPECTIVE
POTENTIAL PARTNERS OR COMPETITORS
- --------------------------------------------
NORESCO UTILISAVE
ENRON UTILITY.COM
LODESTAR ENERMETRIC
ENERCOM EXCELERGY
ENERGY MASTERS SILICON ENERGY
ELECTRIC.COM AMDAX
GREEN MOUNTAIN DUKE SOLUTIONS
NEW ENERGY USOURCE
APX CONNECTIV
SUMMARY FINDINGS OF TRACK 1
- ---------------------------------------------
RETAIL C&I EXCHANGE PLAYS
- DO NOT HAVE COMPELLING VALUE
PROPOSITIONS
- ARE NOT ATTRACTING CUSTOMERS
SUCH PLAYS REPRESENT HIGH RISK ENDEAVORS
UNTIL MAJOR ISSUES ARE ADDRESSED
RETAILCO REPRESENTS A HIGHLY RISKY PROPOSITION
FOR PX AND PSC, GIVEN CURRENT CAPABILITIES
IMPLICATIONS FOR TRACK 2
- LONG TERM VIABILITY OF THESE FRONTRUNNERS IS IN QUESTION
- PARTNERSHIP EXPLORATIONS AT THE RETAIL LEVEL MAY NOT REPRESENT
THE BEST INVESTMENT OF MANAGEMENT TIME AND PX BRAND NAME
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WHERE'S THE BEEF?
ON-LINE ENERGY TRADING EXPECTED TO BALLOON
[BAR GRAPH]
$ BILLIONS
OH, REALLY?
1999 11
2000 30
2001 57
2002 101
2003 170
2004 266
NOTE: VALUES INCLUDE WHOLESALE AND RETAIL TRADING
SOURCE: FORRESTER RESEARCH
"NONE (OF THE EXISTING PLAYERS) HAVE
SUFFICIENT VOLUME TO BE SELF-SUSTAINING
FROM FEES.
THE SHAKEOUT WILL BE QUICK."
-DAVID SHEPHEARD,
STRUCTURE CONSULTING GROUP
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TRACK 2
HOW CAN CONTRARIAN VIEW BE JUSTIFIED?
B2B ARBITRAGE IS OVER
<Table>
<Caption>
52 WEEK CURRENT
COMPANY SYM HIGH PRICE(1) DECLINE
- ---------------------------------------------------------
ARIBA ARBA 184 82 55%
COMMERCE ONE CMRC 166 52 69%
FREE MARKETS FMKT 370 44 88%
ICG ICGE 212 31 85%
NEOFORMA NEOF 79 7 91%
SCIQUEST SQST 92 10 89%
VENTRO VNTR 244 27 89%
VERTICALNET VERT 148 38 74%
</Table>
- LITTLE VALUE ADD, CUSTOMERS NOT SHOWING UP
- CROWDED FIELD ERODES LONG TERM MARGINS
- MARKET POSITIONS ARE NOT DEFENSIBLE
- SPECULATORS IN RETREAT
(1) JUNE 19, 2000 CLOSING PRICE
SOURCE: WALL STREET JOURNAL
SO WHY DO ANNOUNCEMENTS KEEP COMING?
PRESSURE ON - NEED TO BE DOING SOMETHING
MANAGEMENT
LOW RISK - NO ONE EVER GOT FIRED FOR HEEDING
CONVENTIONAL WISDOM
- CONTRADICTING CONVENTIONAL
WISDOM CAN ENDANGER CAREERS
.....BUT THE TIDE IS TURNING WHERE IT COUNTS
"B2B ROADSHOWS ARE BRUTAL WITH VERY SHORT
CONVERSATIONS SINCE THE CORRECTION.
THE ONLY THING LARGE INSTITUTIONAL INVESTORS WANT TO
HEAR NOW IS NET EARNINGS.
WE DON'T WANT TO HEAR ABOUT GROWTH AND, TO SOME
EXTENT, NOT EVEN ABOUT GROSS MARGINS. WE WANT TO
INVEST IN BUSINESSES THAT ARE MAKING MONEY."
- SENIOR ANALYST, MERRILL LYNCH
SOURCE: INTERVIEWS
MARKETING SUCCESS MAY HAVE TAKEN SOME TOO FAR
CONTRARIAN VIEW MAY SOON BECOME CONVENTIONAL
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KEY QUESTIONS
- - ARE THERE LESSONS THAT WE CAN LEARN FROM THE MARKET WE HAVE STUDIED?
- - ARE WE WILLING TO RISK THAT WEB-BASED INITIATIVES WILL "TAKE OVER THE WORLD?"
- - WILL WE MISS A WINDOW OF OPPORTUNITY BY WAITING?
- - ARE CURRENT ON-LINE COMPETITORS MISSING ANYTHING BIG?
- - WILL TRADITIONAL MARKETERS KEEP SHARE BY OFFERING WEB OPTIONS?
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RECOMMENDATIONS
TRACK 1 o DELAY THE IMPLEMENTATION OF RETAILCO UNTIL THE MARKET
CONDITIONS PROVE MORE FAVORABLE OR CUSTOMERS PERCEIVE GREATER
VALUE IN THE CONCEPT
- MONITOR THE MARKET TO IDENTIFY IF "BURNING PLATFORM"
TRIGGERS OCCUR
- CONTINUE TO EVALUATE THE RETAIL MARKET TO IDENTIFY
POTENTIALLY FEASIBLE OPPORTUNITIES
TRACK 2 o CONSIDER PARTNERSHIPS WITH THE FRONTRUNNERS, BUT LIMIT THE
INVESTMENT OF TIME AND BRAND
- MONITOR THE FRONTRUNNERS FOR WEAKNESS (EARNINGS, CASH
BURN, IPO RECEPTIVENESS ...)
- MONITOR THE MOVES OF ENTRENCHED PLAYERS WHO ARE MOST
LIKELY TO MAINTAIN CUSTOMER RELATIONSHIPS
OVERALL o TAKE THE LESSONS LEARNED IN THIS STUDY AND APPLY THESE TO THE
BASE BUSINESS
- HYPE WORKS, BUT AS CONCERNS GROW ABOUT THE ABILITY TO
DELIVER AGAINST IT, MASSIVE RETRENCHMENT WILL OCCUR
- VISIBLE $$ VALUE PROPOSITIONS STILL MATTER TO CUSTOMERS
- THE MARKET WILL ULTIMATELY REWARD ONLY COMPANIES THAT GROW
PROFITABILITY
SO,
o CONSIDER E-COMMERCE OPPORTUNITIES IN THE WHOLESALE SPACE
- HYPE AND LEVERAGE OUR EXISTING CAPABILITIES - BUT BACK IT
UP WITH ACTION
- TAKE ADVANTAGE OF YOUR LEAD ON COMPETITORS
- BE SMART ABOUT FIGURING OUT WHAT CUSTOMERS WANT
- DO IT PROFITABLY, OR AT LEAST WITH NEAR TERM LINE OF SIGHT
TO PROFITABILITY
- OFFER SUPPLY TO NEW RETAIL ENTRANTS: BE CRITICAL SPOT/
FORWARD SUPPLY SOURCE FOR ALL ENTRANTS WHO OFFER
COMPETITIVE RETAIL MARKETING IN CA
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AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER / SUPPLIER ANALYSIS
- CAPABILITIES / GAP ASSESSMENT
- TRACK 2 / COMPETITOR ANALYSIS
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RETAIL TRADING MAY PRESENT AN OPPORTUNITY FOR THE PX
[BAR GRAPH]
ON-LINE ENERGY TRADING EXPECTED TO BALLOON
$ BILLIONS
1999 11
2000 30
2001 57
2002 101
2003 170
2004 266
NOTE: VALUES INCLUDE WHOLESALE AND RETAIL TRADING
SOURCE: FORRESTER RESEARCH
PX CURRENT INITIATIVES LEAVE ROOM FOR RETAIL PLAY
- --------------------------------OYSTER------------------------------------
INFORMATION
SERVICES TRADING SCHEDULING SETTLEMENTS CLEARING
| \ / \ /
| \ / \ /
| \ / \ /
| \ / \ /
| BLACK PEARL CLEARCO
|
|
|
|
------------- RETAILCO
- INFORMATION SERVICES
- RETAIL TRADING
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FRIDAY, APRIL 14, 2000 MEETING DEFINED RETAILCO
MISSION:
TO BE THE ELECTRONIC PROCUREMENT ASSISTANT FOR C&I BUSINESSES AND RETAIL
AGGREGATORS TO SOURCE AND FACILITATE DELIVERY (PROVIDE FULFILLMENT) OF
ENERGY AND UTILITY SERVICES
PRODUCTS AND SERVICES:
AUTOMATED RFP
- COMMODITY
- ESCO
COMMODITY SCHEDULING / FULFILLMENT
E-CONSULTING
- ANALYSIS AND RECOMMENDATIONS OF POWER OPTIONS
- INTELLIGENT BEST PRACTICES
- ECONOMIC ANALYSIS
- PORTFOLIO OPTIMIZATION
- RISK MANAGEMENT TOOLS
BUYER DESKTOP
- MARKET PRICING, NEWS, WEATHER, ETC.
- REGULATORY INFO
- GRID/OASIS
- MESSAGE BOARDS
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PROJECT OVERVIEW
PROJECT OBJECTIVES:
TRACK 1 - VALIDATE THE FEASIBILITY OF THE DEFINED RETAILCO
TRACK 2 - UNDERSTAND AND ANALYZE THE E-COMMERCE COMPETITIVE LANDSCAPE
o POTENTIAL COMPETITORS
o POTENTIAL PARTNERS
MODULES
- --------------------------------------------------------------------------------
SUPPLY CHAIN PETE RASLAVICUS
CUSTOMER ANALYSIS DREW BRABB, Tony Frontino, Mark Hoppe
SUPPLIER ANALYSIS DREW BRABB, Tony Frontino, Mark Hoppe
CUSTOMER ACQUISITION COST PETE RASLAVICUS
CAPABILITY AND GAP ANALYSIS RAYMOND JOHNSON
TRACK 2 HEATHER HENDERLEITER, Peter Raslavicus
PROJECT LEAD HARRY JORDAN
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PROJECT TIMELINE
[TIME LINE OMITTED]
MAY 1 INITIAL START
MAY 10 ACTUAL START
MAY 17
JUNE 9 READ OUT
JUNE 26 PROJECT END
FINAL PRESENTATION
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AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER / SUPPLIER ANALYSIS
- CAPABILITIES / GAP ASSESSMENT
- TRACK 2 / COMPETITOR ANALYSIS
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C & I CUSTOMERS
4 Basic Needs
POWER COMMODITY
- MINIMIZE TOTAL COST (PRICE/UNIT)
- ASSURANCE OF QUALITY
- CUSTOMIZE DELIVERY
MANAGE DEMAND
- MINIMIZE OVERALL DEMAND
- FORECAST FUTURE DEMAND
- SCHEDULE DEMAND FOR BEST COMMODITY PRICE
MANAGE FACILITIES
- EQUIPMENT/MACHINERY
- PERSONNEL/OPERATIONS
- MAINTENANCE
UNMET OR EVEN UNKNOWN NEEDS
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ENERGY SUPPLY CHAINS PRESENT CONTINUUM OF DYNAMIC
CHANGE
[CHART]
MARKETS ARE PROGRESSING TOWARD
A NEW SUPPLY CHAIN MODEL BUT AT
DIFFERING PACES AND LEVELS OF PROGRESS
[CHART]
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COMMODITY & ENERGY SERVICES SUPPLY CHAIN
Old Model
PG & E Generation > Transmission > Distribution > C&I Customer
SEMPRA Generation > Transmission > Distribution > C&I Customer
SCE Generation > Transmission > Distribution > C&I Customer
COMPLETELY VERTICAL INTEGRATED CHAINS PROTECTED BY LOCAL MONOPOLIES
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COMMODITY & ENERGY SERVICES SUPPLY CHAIN
Current Model
[FLOW CHART]
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RETAILERS FACE A VARIETY OF CUSTOMER CONTACTS AND
METHODS OF SELLING COMMODITY & SERVICES
C&I CHARACTERISTICS
HIGH % COGS
HIGH $ ON ENERGY
LARGE ORGANIZATIONS
LOW % COGS
LOW $ ON ENERGY
SMALL ORGANIZATIONS
PREFERRED SALES METHOD
DIRECT WITH WHOLESALER
COMMISSIONED AGENT
TELEMARKETING
DIRECT MAIL
BUYER
ENERGY MANAGER
PROCUREMENT MANAGER
NONSPECIFIC MANAGER
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SUPPLY CHAIN DYNAMICS - THE C&I CUSTOMER
MARKET DYNAMIC
DIFFERING CONTACTS FOR ENERGY PROCUREMENT DEPENDING ON THE CHARACTERISTICS OF
THE ORGANIZATION
NEED FOR BUYER EDUCATION INCREASES AT THE LOWER END OF THE SPECTRA
CUSTOMERS ARE INCREASINGLY AWARE OF POTENTIAL FOR ENERGY SERVICES AND
FACILITIES MANAGEMENT SERVICES TO IMPACT THE BOTTOM LINE
CUSTOMERS INCREASING DEMAND FOR BILL CONSOLIDATION, METERING, AND COMPLEMENTARY
SERVICES (E.G., ANALYTICS, AUDITING, ETC.)
IMPLICATIONS
- - SALES MODELS MUST SUPPORT THE BUYING TYPES
- - RELATIVE COST OF SALES INCREASES AT THE LOWER END OF THE SPECTRA
- - ADDED EDUCATIONAL CAPABILITIES MUST BE IN PLACE
- - INCREASES DEMAND FOR EDUCATIONAL SUPPORT, MAY NOT BE WILLING TO PAY FOR IT
- - SUCH SERVICES BECOMING A COST OF DOING BUSINESS
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SUPPLY CHAIN DYNAMICS - RETAIL/WHOLESALE MARKETING
MARKET DYNAMIC
CUSTOMER MANAGEMENT IS DAUNTING
MANAGING MULTI-PARTY RELATIONSHIPS TO SERVICE CUSTOMERS
SOME RETAILER WILL ACT AS WHOLESALERS, AND VICE VERSA
IMPLICATIONS
- - THE ABILITY TO DELIVER ON FULFILLMENT WILL BE A CRITICAL DIFFERENTIATOR
- - COMPLEXITY OF MANAGEMENT IS INCREASING, NOT DECREASING
- - MANAGEMENT TIME AND EFFORT FORGOING MYRIAD OF RELATIONSHIPS
- - STANDARDIZATION OF PROCESSES
- - CUSTOMER FULFILLMENT MAY BE DEPENDENT ON PERFORMANCE OF NUMEROUS 3RD PARTIES
- - THE LINES ARE BLURRING
- - MASSIVE GROWTH IN COMPETITION ACROSS "ROLES" FROM ESTABLISHED ENERGY PLAYERS
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SUPPLY CHAIN DYNAMICS - INTERNET PLAYS - MARKET
INFORMATION & EXCHANGE SERVICES
MARKET DYNAMIC
FEW MANAGE THE SERVICE DELIVERY AND THE ONGOING CUSTOMER RELATIONSHIP
MANY FALL INTO THE "DATING SERVICE" MODEL AND OFFER INFORMATION, INTRODUCTIONS
AND/OR SIMPLE SWITCHING SERVICES (ON LINE OR VIA PAPER)
SOME EXCHANGE SERVICES DO NOT FULLY COMPLETE A BINDING TRANSACTION ON-LINE
MARKET INFORMATION PROVIDERS CAN CHANNEL CUSTOMERS TO BOTH ENERGY SERVICES
PROVIDERS AND RETAIL POWER MARKETERS
IMPLICATIONS
- - MANY CUSTOMER NEEDS LEFT UNMET
- - ADDED LAYER OF COST TO STAND IN BETWEEN CUSTOMER AND LOCAL UTILITY
- - "THEY ARE NOT AROUND FOR THE BEST PART OF THE DATE."
- - EXPECT SUBSTANTIAL EROSION OF FEES FOR MATCHMAKING AND TRANSACTION
PULL-THROUGH
- - PLAYERS MUST BE FLEXIBLE TO HANDLE LOCAL PUC REQUIREMENTS WITH MAJOR PROCESS
IMPACTS
- - COMPLEX RFPS WILL CONTINUE (FOR SOME TIME) TO REQUIRE DIRECT NEGOTIATION
- - CHANNEL TO SERVICE PROVIDERS PROVIDES OPPORTUNITY FOR CUSTOMER POACHING
- - MUST PROVIDE COMPELLING, DEFENSIBLE SERVICE TO PREVENT POACHING
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AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER / SUPPLIER ANALYSIS
- CAPABILITIES / GAP ASSESSMENT
- TRACK 2 / COMPETITOR ANALYSIS
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ACQUISITION COSTS HIGH
Market forces favor incumbent supplier
[GRAPHIC]
PRE-EXISTING RELATIONSHIP WITH RETAILER/SUPPLIER
SERVICE IS GOOD ENOUGH
SERVICES BUNDLED
NARROW, INFREQUENT, & UNKNOWN TIMING WINDOW FOR ENERGY PURPOSES
CUSTOMER UNAWARE OF OTHER OPTIONS
UNDER CONTRACT
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REVIEW OF CUSTOMER ACQUISITION COSTS
[BAR GRAPH OMITTED]
START-UPS FACE HIGH ENTRY COSTS V. TRADITIONAL PLAYERS
SALES AND MARKETING EXPENSE AS A % OF FY99 REVENUE
TRADITIONAL ENERGY PLAYERS
ENRON - 2%(1)
SEMPRA - 9%(1)
TRADITIONAL TELECOM PLAYERS AS ANALOGS
MCI - 12%(2)
SPRINT - 15%(2)
B2B PLAYERS
FREEMARKETS - 57%
VENTRO - 74%
VERTICALNET - 124%
SCIQUEST - 298%
(1) Estimated as 25% of Operating Expense
(2) Estimated as 50% of SG&A
Source: SEC filings
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RETAIL CUSTOMER ACQUISITION COSTS SUMMARY
Represents Low-End of Commercial Customers, Below RetailCo Target
- $73K PER YEAR AVERAGE SALES PERSON SALARY COSTS (WITH OVERHEAD LOAD)
- $160K AVERAGE GROSS MARGIN GENERATED PER SALES PERSON
- CALCULATED SALARY DERIVED CUSTOMER ACQUISITION COSTS AS A PERCENTAGE OF
MARGIN = 45.7%
- OTHER COMPONENTS CAN BE ADDED SUCH AS PROCESSING AND SET UP COSTS
- CUSTOMER RETENTION = 88-93% (AND FALLING)
- CUSTOMER ACQUISITION COSTS $1330 PER CUSTOMER
- AS A PERCENTAGE OF REVENUE - VERY HIGH
- PROXY INDUSTRIES $186 PER CUSTOMER
Source: Interviews
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AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER / SUPPLIER ANALYSIS
- CAPABILITIES/GAP ASSESSMENT
- TRACK 2 / COMPETITOR ANALYSIS
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RESEARCH APPROACH
OBJECTIVE: TO GAIN INSIGHT ON THE INTEREST OF BOTH CUSTOMERS AND SUPPLIERS IN
AN ONLINE OR "E" PROCUREMENT PLATFORM FOR ENERGY COMMODITIES
CUSTOMER RESEARCH
WIDE RANGE OF CUSTOMERS BASED ON $ SPENT AND $ VS TOTAL COGS
CONCERNS ABOUT "E" PLATFORMS FOR ENERGY PROCUREMENT
IDEAS FOR AUTOMATING THE RFP PROCESS
OTHER CONTENT/SERVICES IMPORTANT TO SUCH A PLATFORM
SUPPLIER RESEARCH
COMPETITIVE ESPs OPERATING IN REGIONS ACROSS THE COUNTRY
VALUE OF AN ONLINE PROCUREMENT PLATFORM
PLANS FOR PARTICIPATION IN SUCH EXCHANGES
CONCERNS ABOUT PARTICIPATING
KEY FEATURES AN ePROCUREMENT PLATFORM SHOULD INCLUDE
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INTERVIEW LIST
COMPANY TITLE OF INTERVIEWEE HQ LOCATION
{ MOTEL 6 VP UTILITIES AND TELECOM DALLAS, TX
{ ALBERTSON'S ENERGY MANAGER BOISE, ID
{ BOMA SF MGR., POWER POOL SAN FRANCISCO, CA
{ CSU PROCUREMENT OFFICER LONG BEACH, CA
{ MA HEFA DIRECTOR BOSTON, MA
{ HYATT HOTELS DIRECTOR OF PROCUREMENT CHICAGO, IL
{ BOMA PHILADELPHIA CHAIRMAN UTILITIES COMMITTEE PHILADELPHIA, PA
{ SUSQUEHANNA PFALZGRAFF UTILITIES MANAGER YORK, PA
{ HERSHEY FOODS DIRECTOR ENERGY COMMODITIES HERSHEY, PA
{ BELL ATLANTIC CORPORATE SOURCING NEW YORK, NY
{ ROBINSON MAY VP MAINTENANCE N. HOLLYWOOD, CA
CUSTOMERS { CARL KARCHER ENTERPRISES ENERGY MANAGER ANAHEIM, CA
{ CB RICHARD ELLIS DIRECTOR LOS ANGELES, CA
{ CA MFRS & TECH ASSN. SR. VP SACRAMENTO, CA
{ MA HIGH TECH COUNCIL VP & GC WALTHAM, MA
{ SAFEWAY DIRECTOR, MAINTENANCE & UTILITIES PLEASANTON, CA
{ MCDONALD'S EQUIPMENT SYSTEMS OAK BROOK, IL
{ GENERAL CABLE CORP. VP, RISK MANAGEMENT HIGHLAND HEIGHTS, KY
{ COLUMBIA HCA MGR., NATIONAL ENERGY CONTRACTS NASHVILLE, TN
{ NJ BUSINESS & INDUSTRY ASSN VP TRENTON, NJ
{ MATTEL DIRECTOR, FACILITIES EL SEGUNDO, CA
{ TRICON GLOBAL NAT'L ENERGY MANAGER DALLAS, TX
{ CHEMICAL IND. COUNCIL OF NJ DIRECTOR TRENTON, NJ
{ DUKE SOLUTIONS ECOMMERCE DIRECTOR CHARLOTTE, NC
{ PPL RESOURCES MANAGER, ECOMMERCE ALLENTOWN, PA
SUPPLIERS { NE/AES MIDWEST VP BUSINESS DEVELOPMENT CHICAGO, IL
{ NE/AES WEST VP LOS ANGELES, CA
{ ENRON ENERGY SERVICES DIRECTOR, RISK MGT. HOUSTON, TX
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KEY FINDINGS AND RESULTS - CUSTOMER INTERVIEWS
NO VALUE SEEN AT DOT.COMS
o MOST CUSTOMERS INTERVIEWED HAVE BEGUN INVESTIGATING ONLINE PROCUREMENT OPTIONS
o COLUMBIA HCA PARTICIPATED IN ON-LINE PROCUREMENT, BUT CLOSED DEAL WITH
TRADITIONAL VENDOR BECAUSE IT WAS CHEAPER
- WHY? "THE FEE ... BECAME A PROBLEM."
- WHAT PROD/SVC WOULD MAKE YOU ACCEPT THE FEE? "I CAN'T ANSWER THAT QUESTION"
o LACK OF LIQUIDITY AND VIBRANCY IN ON-LINE MARKETS
o REGIONAL NATURE OF POWER MARKETS MAKE THE STRUCTURE OF THE EXCHANGE COMPLEX
o CONCERNS REGARDING TRANSACTION FEES
o CONCERNED ABOUT THE QUALITY/RELIABILITY OF SUPPLIERS ON THE OTHER SIDE
o EXCHANGE WOULD NEED TO ASSUME SOME RISK AND SUPPLY GUARANTEES
FEW RISE ABOVE THE NOISE
o MOST HAVE NOT BEEN ABLE TO IDENTIFY PLATFORMS APPROPRIATE FOR A RETAIL
COMMERCIAL CUSTOMERS NEEDS
- MOST AWARE OF MASS MARKET PLATFORMS (utility.com, essential.com)
- SEVERAL AWARE OF THE PROPRIETARY WHOLESALE TRADING PLATFORMS (ENRONONLINE,
CORALCONNECT)
- ONLY A FEW AWARE OF SPECIFIC COMMERCIAL RETAIL PLATFORMS. (ENERMETRIX,
AMDAX)
WILLING IF COMPETING VALUE PROPOSITION BUT NONE SEEN YET
o AGREEMENT IN THEORY WITH THE APPLICABILITY OF AN ONLINE PLATFORM FOR ENERGY
PROCUREMENT
o RETAIL EXCHANGE COULD COLLECT AND POST REAL TIME METER AND FACILITY
CONSUMPTION DATA ALONG WITH REAL TIME POWER POOL PRICES
o VALUABLE TO GENERATING RFPs
CUSTOMERS APPEAR SATISFIED WITH CURRENT OFFERINGS
Source: Customer interviews
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KEY FINDINGS AND RESULTS - SUPPLIER INTERVIEWS
PROS
o REDUCES OVERALL CUSTOMER ACQUISITION COSTS
o WOULD VALUE A COMMON RFP EVALUATION PROCESS AND PLATFORM
CONS
o LESS ENTHUSIASTIC ABOUT USING A THIRD PARTY ECOMMERCE PLATFORM AS A MEANS OF
COMPETING FOR CUSTOMERS
- VIEWED NEGATIVELY AS IT POTENTIALLY INTERFERES WITH THE DEVELOPMENT OF A
DIRECT RELATIONSHIP BETWEEN THE SUPPLIER AND ITS CUSTOMERS
o "UNFAIR TERMS" FROM THE ENERMETRIX PLATFORM, SUPPLIERS CONCERNED ABOUT
EXCHANGES' CHARGES FOR USAGE
o CUSTOMER GENERATED RFPS RARELY PROVIDED ALL THE INFORMATION NEEDED TO
DEVELOP A GOOD BID AND MUCH TIME AND EXPENSE IS PUT TOWARD TRYING TO OBTAIN
OR DEAL WITHOUT THIS DATA
- KEY DATA SUPPLIERS REQUIRE INCLUDES:
o LOAD DATA/LOAD SHAPE (HOURLY DATA PREFERRED)
o LOCATION OF ALL FACILITIES INCLUDED IN RFP
o CURRENT YEAR'S CONSUMPTION DATA
o UTILITY ACCOUNT NO., RATE SCHEDULE, UTILITY ID
o ABILITY TO CURTAIL OR BE INTERRUPTED
Source: Supplier interviews
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AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER / SUPPLIER ANALYSIS
- CAPABILITIES / GAP ASSESSMENT
- TRACK 2 / COMPETITOR ANALYSIS
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VALUE CHAIN DEFINES REQUIRED CAPABILITIES
ON-GOING C&I CUSTOMER BUSINESS PROCESSES
<Table>
<Caption>
PREPARE
LIST OF
OPTIONS
RESEARCH DECIDE ON SOURCE SETTLEMENTS,
ENERGY REQUIRED AS TAKE BILLING, AND MONITOR
REQUIREMENTS PORTFOLIO APPROPRIATE DELIVERY CLEARING PERFORMANCE
- - COLLECT AND - CO-GEN CONSTRUCTION - CONSUME - AUDIT, - PROVIDE DATA /
ANALYZE PROJECT ENERGY ANALYZE, PAY COMPILE
USAGE INFO - ENERGY DSM CNSLTNG & - MONITOR, BILLS METRICS
- - COMPILE EFFICIENCY EQUIP OPTIMIZE, - MANAGE - ANALYZE
INFORMATION UPGRADES CONTROL CONTRACT MARKET DATA
ON RATES, - LT CONTRACT RFP, BILATERAL USAGE
TARIFFS, RULES NEGOTIATIONS - MANAGE RISK
- ST CONTRACT RFP
- SPOT MARKET
- REAL-TIME ON-DEMAND
USAGE
</Table>
RETAILCO SUPPORT SERVICES
RETAIL ENERGY MARKETING
CUSTOMER RELATIONSHIP MANAGEMENT
MARKET INFORMATION SERVICES (DATA COLLECTION AND PACKAGING)
WORKFLOW PROCESS AUTOMATION
COMPUTER OPERATIONS
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SIGNIFICANT CAPABILITY GAPS EXIST TO IMPLEMENTING RETAILCO
CAPABILITIES REQUIRED CALPX PSC RETAILCO COMMENTS
--------------------- ----- --- -------- --------
[RETAIL ENERGY MARKETING X EXCOS/POWER MARKETERS]
[ENERGY STRATEGY CONSULTING X OFFLINE CONSULTANTS]
[RETAIL ENERGY TARIFFS X OFFLINE CONSULTANTS]
METER DATA ANALYSIS X X PEROT'S IQOM SERVICE
CUSTOMER RELATIONSHIP MANAGEMENT X X DEVELOP USING SOFTWARE PLATFORM
WHOLESALE ENERGY TRADING X PX CORE COMPETENCY
- -----------------------------------------------------------------------------------------------
SUPPLIER SCREENING X CREDIT AGENCIES
RETAIL ENERGY PROJECTS X ENERGY EFFICIENCY/DSM
[RFP PROCESS X DEVELOP USING SOFTWARE PLATFORM]
- -----------------------------------------------------------------------------------------------
[MULTI-ATTRIBUTE BIDDING X DEVELOP USING SOFTWARE PLATFORM]
WHOLESALE/RETAIL INTERFACE X DEVELOP IN-HOUSE
WHOLESALE ENERGY SCHEDULING X PX CORE COMPETENCY
- -----------------------------------------------------------------------------------------------
ENERGY SERVICE CONTRACT MANAGEMENT X X ESCOS/OUTSOURCERS
RETAIL ENERGY MONITORING & CONTROL X X PEROT'S IQOM SERVICE
RETAIL BILLING/EBPP X X BILLINGZONE/TENFOLD SOFTWARE
- -----------------------------------------------------------------------------------------------
WHOLESALE SETTLEMENTS AND BILLING X X PX CORE/CLEARCO
BUSINESS INTELLIGENCE/INFO SERVICES X MARKET DATA COMPANIES
COMPUTER OPERATIONS X X PEROT DATA CENTER/IT OUTSOURCING
- -----------------------------------------------------------------------------------------------
SYSTEMS INTEGRATION X PEROT CORE COMPETENCY
WORKFLOW AND PROCESS AUTOMATION X X PEROT
BEST PRACTICE PROCESSES X BENCHMARKING CONSULTANTS
[ ] MOST CRITICAL FOR RETAILCO
CAPABILITY GAPS CAN BE FILLED BY DEVELOPING CAPABILITY IN-HOUSE
OR BY SELECTING PARTNERS TO COMPLEMENT COMPETENCIES
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AGENDA
EXECUTIVE SUMMARY
APPENDIX
- BACKGROUND
- SUPPLY CHAIN ANALYSIS
- CUSTOMER ACQUISITION COSTS
- CUSTOMER/SUPPLIER ANALYSIS
- CAPABILITIES/GAP ASSESSMENT
- TRACK 2/COMPETITOR ANALYSIS
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METHODOLOGY
o COMPILED LIST
o REVIEWED WEB SITES, HOOVERS, NEWS/PRESS RELEASES
o DETERMINED SUCCESS FACTORS
- IDENTIFIED CUSTOMERS
- ONLINE PRESENCE/CAPABILITY
- AFFILIATIONS/PARTNERSHIPS
o FOCUSED PRIMARILY ON THOSE PLAYS WHO DEAL WITH C&I CUSTOMERS
o COMPILED SPREADSHEET WITH INFORMATION ON ALL PLAYERS IDENTIFIED
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PLAYERS REVIEWED
<Table>
ALLCONNECT ENERGYGUIDE PG&E BROKERS 2,000
ALTRA ENERGYON.COM POWER CO-OP
AMDAX.COM ENERGY ONLINE POWERQUOTE.COM
APX ENERGYPORTAL.COM POWERTRUST.COM
BRIGHTOPTIONS.COM ENERMETRIX RED METEOR
BUYING POWER (UK) ENRON RETX (RETAIL ENERGY TRANSACTION EXCH)
CALPOL ESSENTIAL.COM SCANA ENERGY MARKETING
CHOOSEENERGY.COM EXCELERGY ENERGYCUSTOMER.COM SERVISENSE
COMMONWEALTH ENERGY CORP EXELON SILICON ENERGY
CONECTIV GREENMOUNTAIN.COM SMART ENERGY.COM
DUKESOLUTIONS HOUSTONSTREET STRUCTURE CONSULTING GROUP
DYNEGY 121ENERGY USOURCE (UNITIL.COM)
ELECTRICITYCHOICE ILLINOVA ENERGY PARTNERS UTILCONNECT.COM
ENERCOM INTERCONTINENTAL POWER EXCHANGE UTILIPRO
ENERGY E-COMM LODESTAR UTILISAVE
ENERGY MASTERS INTERNATIONAL MYUTILITY.COM UTILITY.COM
ENERGY.COM (BEMANY) NATIONAL ENERGY CHOICE (NECHOICE, LLC) VERTICALNET (POWERONLINE)
ENERGYCENTRAL NEW ENERGY VENTURES/NEWENERGY WATTAGE MONITOR
ENERGYCHOICE NORESCO WORLD ENERGY EXCHANGE.COM
ENERGYCROSSROADS PANTELLOS XENERGY
ENERGY GATEWAY.COM PEPCO/ENERGYLEADER.COM
</Table>
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ENERGY PLAYS
A Supply Chain Perspective
[CHART]
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ENERGY PLAYS
A Supply Chain Perspective
16 WHOLESALE EXCHANGES 6 FACILITIES MANAGEMENT
& MARKETERS
29 ENERGY SERVICES
31 RETAIL EXCHANGES
& MARKETERS
[CHART]
Source: Company information, literature searches
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ENERGY PLAYS
A Regional Perspective
[GRAPHIC]
Source: Company information, literature searches
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ENERGY PLAYS
A Regional Perspective
[UNITED STATES MAP]
Source: Company information, literature searches
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TOP TIER ENERGY PLAYS
The Frontrunners
ENABLE APPEARS
RETAIL C&I CUSTOMER ENERGY FACILITY ESTABLISHED ONLINE AFFILIATIONS/ TO
MARKETPLACE CHOICE SERVICES MANAGEMENT CUSTOMERS CAPABILITY PARTNERS DISTRIBUTE
- --------------------------------------------------------------------------------------------------------------------------------
NORESCO X X X X X X
WORLD ENRON X X X X X X X
- --------------------------------------------------------------------------------------------------------------------------------
NORTH LODESTAR X X X
AMERICA ENERCOM X X X X
ENERGY MASTERS X X X X
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC.COM X X X X X
GREEN MOUNTAIN X X X X
NEW ENERGY X X X X X
US APX X X X X
UTILISAVE X X X X X
UTILITY.COM X X X X X X
ENERMETRIX X X X X
EXCELERGY (ECHOICENET) X X X X X
- --------------------------------------------------------------------------------------------------------------------------------
WEST SILICON ENERGY X X X X
AMDAX X X X X X
- --------------------------------------------------------------------------------------------------------------------------------
DUKE SOLUTIONS X X X X X X
EAST USOURCE X X X X X
CONNECTIV X X X X X X X
- --------------------------------------------------------------------------------------------------------------------------------
Source: Company information, literature searches
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INSIGHTS ON CHALLENGES AND OPPORTUNITIES
o LEADING STRATEGIES HAVE INCLUDED
- FOCUSED SERVICE/FOCUSED MARKET
- FULL SERVICE/REGIONAL MARKET
- ESTABLISHED BRAND
- ALLIANCE STRATEGY
o ACHIEVE BRAND DEVELOPMENT BEFORE A TARGET AREA IS DEREGULATED
- VIA ENERGY CONSULTING SERVICES
- ALIGN OR PARTNER WITH CURRENT UTILITIES OR SUPPLIERS
o MUST BE FLEXIBLE IN TURBULENT ENVIRONMENT
o CREATE A "BURNING PLATFORM" TO INCENT CUSTOMERS TO NOT ONLY CHANGE
SUPPLIERS BUT TO INCREASE INTEREST, ATTENTION AND INVOLVEMENT IN VALUE
ADDED SERVICES
BUT TROUBLE MAY LOOM:
"NONE (OF THE EXISTING PLAYERS) HAVE SUFFICIENT VOLUME TO BE
SELF-SUSTAINING FROM FEES. THE SHAKEOUT WILL BE QUICK"
- DAVID SHEPHEARD, STRUCTURE CONSULTING GROUP
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