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********************************************************************* A new SCIENTECH PowerHitter interview with Peter Weigand, Chairman and CEO of Skipping Stone, is now available. Find out more at: http://www.consultrci.com ********************************************************************* =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH IssueAlert, November 15, 2000 Utility.com Uses $22M Financing to Grow eUtilities Partnerships By: Will McNamara, Director, Electric Industry Analysis =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Utility.com announced that it has completed its third round of venture financing, raising over $22 million. Gaz de France, one of the top three European gas companies, led the deal. Utility.com will use funds raised in this third round to support operations as it implements its eUtilities Program partnerships, which it has formed with traditional utilities in the United States and abroad. ANALYSIS: Financing from venture capitalists seems to be the theme of the week. Just yesterday, I wrote about SmartEnergy finishing its Series A round of financing, in which it received $15 million from a mix of American and European investors that included Alliant Energy as a major contributor. In my analysis, I mentioned Utility.com as a competitor of SmartEnergy, and argued that the latter appeared to be moving along more aggressively with a plan to become operational in all 25 deregulating U.S. states and across Europe. About an hour after I distributed my column, Utility.com announced this significant round of financing, which certainly rejuvenates its position as "the world's first Internet utility." If case you are not familiar with Utility.com's business model, the company offers electricity, natural gas, telephone and Internet access to customers in competitive markets. In fact, as individual U.S. states have moved close= r to competition, it seems as if Utility.com has begun operating in all of those states. Its marketing strategy has been to promote cost savings, reliability and the convenience of operating online. In addition, with the bundled services of various offerings, Utility.com promotes a "one-stop shopping" approach for multiple services, with billing and customer service= s all available online. As noted, Gaz de France led this third round of financing for Utility.com. It seem curious that Gaz de France would be such a primary participant in the investments, but keep in mind that Europe continues to privatize its gas and electricity markets. Gaz de France, along with its electric counterpart EDF, is investing in various energy companies to both learn about new competitive techniques and financially benefit when competition opens fully across Europe. Utility.com, of course, benefits because Europe, when it does privatize completely, will represent a very lucrative energy market and one that could potentially exceed the U.S. energy market. Joining Gaz de France in the investment in Utility.com are some heavy hitte= rs, both traditional utility companies and investors that are banking on the hope that companies like Utility.com will start capitalizing from deregulat= ion in the near-term. The list of investors is impressive: Southern Company Energy Marketing, Sempra Energy Trading, idealab!, idealab! Capital Partner= s, Trident Capital, PRIMEDIA Ventures, Kinetic Ventures, TL Ventures, Moore Capital Management, and Sumitomo Corporation of Japan. As noted, this was Utility.com's third round of investments, and all previous investors=20 contributed again in this round. Utility.com's relationship with Southern Company is one of the foundations on which the company was built. Southern Company was one of the original investors in Utility.com and serves as the company's preferred wholesale provider. What this means is that, as Utility.com markets electricity to customers across deregulated markets, the power is typically coming from Southern Company. In previous discussions I've had with Chris King,=20 Utility.com's CEO, he has reiterated that, although Southern Company is a preferred=20 provider, it is not Utility.com's only provider. "Southern has given us very good pricing, and we've taken advantage of their scale economies, being the largest energy generator in the country," King told me a few months ago. "But we don't use them exclusively to ensure that we get competitor pricing from them. If they ever give us a price that we don't like for whatever reason, we can go out and get a price from somebody else." It seems pretty clear that Utility.com will use this financing to grow its unique eUtilities Program partnerships, along with expanding its core operations. Its eUtilities partnerships are focused on co-branding and co-marketing of services with specific utility companies. For instance, Utility.com has formed eUtilities partnerships with Kansas City Power and Light and FirstEnergy. The eUtilities program enables Utility.com to put together a co-branded site where it can sell energy and other related=20 services. The program also has helped Utility.com to expand into states before=20 deregulation has opened competition. For instance, in Missouri=01*a state that is still regulated=01*customers can sign up with Utility.com and still have all of their utility services consolidated into one online package. Even without savings generated from deregulation, many customers are still finding value in the convenience that Utility.com offers. Just in the last month, Utility.com also began working with electric=20 cooperatives. The company formed a partnership with EnPower, a consortium of member elect= ric cooperatives providing energy products and services in Iowa, Illinois, Minnesota, North Dakota, South Dakota, and Wisconsin. Utility.com will provide participating EnPower member cooperatives with UtilityOne, an=20 information technology and Internet infrastructure platform for utility services.=20 UtilityOne supports marketing and provisioning of multiple utilities over the Internet and serves Utility.com's electricity, telecommunications and Internet=20 customers across the country. This move follows an expansion of Utility.com's=20 telecommunications offerings with the introduction of Utility.com Long Distance. An introducto= ry plan called Utility.com Common Cents offers 100 free minutes of long-distan= ce service to customers for state-to-state calls during the first month of service. Utility.com hopes to offer this service to customers in 48 states by the end of this month. Of course, as I discussed in my analysis of SmartEnergy, it is natural to speculate on whether or not Utility.com is gearing up for an IPO. When I spoke with Chris King last summer, he admitted that going public "is always something you have in mind when you have a company like this." As Utility.com continues to find willing investors that will support its inten= ded growth, an IPO would be a natural progression as Wall Street currently favors energy company stocks that are involved in technologies. Utility.com does face stiff competition, of course, and SmartEnergy is perhaps the leader of that group. Another competitor is Essential.com, which offers a very similar service offering to Utility.com. Both Utility.com and=20 Essential.com are licensed energy providers, meaning that they contract with wholesale providers to purchase energy that they will resell to end-users. Both=20 companies are responsible for all forecasting and settlement issues, which can be difficult when working with different states. Yet one key difference that Utility.com offers is its partnerships with utilities. By partnering direct= ly with utilities such as Southern Company, Utility.com by association gains the powerful brand identity of companies that energy customers already trust. This is a strategy that SmartEnergy also is using by partnering with Alliant Energy. As additional states deregulate, it will be very=20 interesting to see which of these online providers gain a significant market share, and whether or not a large percentage of energy customers will want to conduct their utility transactions online. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Learn about SCIENTECH'S most popular competitive tools, including the=20 E-Commerce and Telecommunications InfoGrid at: http://www.consultrci.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let us know if we can help you with in-depth analyses or any other SCIENTECH information products. If you would like to refer a colleague to receive our free, daily IssueAlerts, please reply to this email and include their full name and email address or register directly at: http://www.consultrci.com/web/infostore.nsf/Products/IssueAlert Sincerely, Will McNamara Director, Electric Industry Analysis wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Feedback regarding SCIENTECH's IssueAlert should be sent to=20 wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH's IssueAlerts are compiled based on independent analysis by=20 SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts are not intended to predict financial performance of companies discussed or to be the basis for investment decisions of any kind. SCIENTECH's sole purpos= e in publishing its IssueAlerts is to offer an independent perspective regard= ing the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy and telecommunications issues. Copyright 2000. SCIENTECH, Inc. If you do not wish to receive any further IssueAlerts from SCIENTECH, pleas= e reply to this message and in the body of the email type "remove."
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