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New Electricity Supplier Will Focus on Major Users

Energy: The venture will provide power and services to large companies nationwide.

September 09, 1997|From Bloomberg News

Three regional electric utilities formed a venture to tap into the emerging national market for electricity by selling services to big companies with outlets in markets across the country.

Cinergy Corp. of Cincinnati, Florida Progress Corp. of St. Petersburg, and New Century Energies Inc. of Denver said the venture, known as Cadence, signed up Service Merchandise Co., a Brentwood, Tenn., retailer with stores in 36 states as its first customer.

Cadence, based in Cincinnati, will initially target retail stores, hotel chains, grocery stores and convenience markets, the companies said. Each of the utilities has a one-third interest in the venture. They didn't disclose the value of Cadence or the size of their investments.

"With the capital and experience of its investing companies, Cadence is positioned to be the nation's only company to offer a full set of energy products and services to national accounts and be able to deliver on all its commitments," Cinergy Chief Executive James E. Rogers said at a Washington news conference announcing the venture.

While other companies--including UtiliCorp United Inc. and Peco Energy Corp., which recently formed an alliance with AT&T Corp. and ADT Ltd. to sell a host of energy and other utility services--have formed national marketing ventures, these are all broader-based than Cadence, Rogers said.

"Relatively few companies are focusing on the transition period between regulation and competition" in the electricity industry, he said.

Although full-scale competition is unlikely to be a reality nationwide for several years, most states are moving on their own to open their markets to power suppliers other than local utility companies.

That's leading to confusion for big companies like Service Merchandise as they try to determine which supplier offers the best rates, said Wayne H. Brunetti, president of New Century. "The energy market is perhaps the most vexing business they face," he said.

Cinergy shares rose 38 cents to close at $33.44, while Florida Progress shares rose 25 cents to close at $32.25, and New Century shares rose 31 cents to close at $40.69. All trade on the New York Stock Exchange.

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