Altra Energy Technologies Inc.
1221 Lamar Street, Suite 950, Houston, TX 77008
Contact: Paul Bourke, president and CEO
Phone: 713-210-8000
Fax: 713-210-8001
E-mail: pbourke@altra.com
Web Site: www.altra.com

Altra allows energy companies to exchange four energy commodities: power, natural gas, natural gas liquids and crude oil. More than 7,000 energy professionals across 500 companies worldwide trade, schedule, transport and account for energy transactions on Altra's systems. The web-based platform enables users to quickly and securely trade in real time and also permits Altra to provide new features and functionality that are flexible and easy to deploy.

The trading system is based on a many-to-many model whereby multiple buyers and multiple sellers post bids and asks, secure agreements and then execute the trade. The Altra Market Place, formerly known as Altrade, offers real-time on-line electronic trading for energy commodities and allows traders to actively view and exchange bids and offers quickly. The Altra Market Place provides complete anonymity, neutrality and high liquidity to traders.

Altra's product line of exchange platforms, front-, middle- and back-office software products, and its information portal and e-business services aims to attract energy commodity traders and brokers, IT professionals, schedulers, accountants and controllers in the energy sector—which includes everything from small municipalities to market-makers like Enron, Duke and BP Amoco, as well as pipeline companies.

Although many companies have entered the rapidly expanding on-line energy markets, Altra positions itself as the only company that offers a complete suite of products to facilitate energy transactions from the price discovery phase to trading, accounting and scheduling.

Automated Power Exchange
5201 Great America Parkway, Suite 522 Santa Clara, CA 95054
Contact: Lynn Fisher, director of corporate communications
Phone: 408-517-2134
Fax: 408-517-2985
E-mail: lfisher@apx.com
Web Site: www.energy-exchange.com

Automated Power Exchange is an Internet-based electricity trading exchange that first became operational in the California market on March 30,1998, when California opened its power market. APX subsequently expanded its operations throughout the United States and to England and Japan. The minimum trade is for a 1-megawatt hour of power. Approximately $850 million in transactions were processed by APX in 2000.

APX is privately held and backed by Bechtel Enterprises among other major venture capital and strategic investors. The system functions as a state-certified power scheduling coordinator between the California Independent System Operator and electricity generators, retailers and end-users active in the California markets.

APX primarily deals with short-term trading of energy-hours for physical delivery and longer-term trading of monthly blocks for physical delivery. In New York, APX provides a financial forward-contract product for hedging. The firm sees its competitive advantage in being the only private, neutral system that offers trading for physical delivery.

The more than 70 market participants using the system include utilities, energy retailers, aggregators, power aggregators, power marketers, generators and municipalities. Fees run 3 cents per MWh in most APX markets (significantly less than the 18 cents per MWh charged by the California Power Exchange).

EnronOnline Enron Global Markets
P.O. Box 4656, 1400 Smith Street, Houston, TX 77002
Contact: Andy Zipper, vice president of e-commerce
Phone: 713-853-4357
Fax: 713-646-8511
E-mail: andy.zipper@enrononline.com
Web Site: www.enrononline.com

Probably the most liquid platform at present with well over $50 billion in notional traded so far, many of the deals on the system are transacted with Enron acting on both sides of the trade. This makes the site more of a marketing platform and less of a true exchange. But as either a trading or marketing site, no one doubts that EnronOnline is on its way to becoming a whopping success for the parent company. The web-based system can offer real-time transaction capabilities, extensive information and customization tools covering a huge array of products.

Commodities listed on the system include gas, power, oil and refined products, plastics, petrochemicals, liquid petroleum gases, natural gas liquids, coal, emission allowances, bandwidth, pulp and paper, metals, weather derivatives, credit derivatives and steel. In natural gas alone, Enron manages the world's largest derivatives book—much of it now accessible on-line. Open during local market trading hours, users can trade in spot, options and futures, and can access real-time market news and a variety of industry-specific trade publications. For weather-sensitive commodities, EnronOnline also offers weather maps and temperature data and forecasts from around the globe.

Intercontinental Exchange
2 Stamford Landing, Stamford, CT 06902
Contact: Rafael Pirutinsky
Phone: 203-921-0369
Fax: 203-921-0368
E-mail: rafe@intcx.com
Web Site: www.intcx.com

The Intercontinental Exchange has become one of the industry's most active commodity trading systems, offering products in a wide range of OTC markets, including crude and refined oil, North American natural gas and electricity, and precious and base metals. Major strategic investors in the platform are among the giant liquidity drivers of the global commodities market. In addition to BP Amoco, founding participants include Morgan Stanley Dean Witter, Royal Dutch Shell Group, SG Investment Banking and the Totalfina Elf Group.

ICE's cross-matching trading system is accessed through the Internet and requires a special application to be installed. The intended target audience covers almost all active participants in the OTC energy markets, including producers, refiners, end users and trading firms. Currently 125 institutions have registered accounts, amounting to roughly 1,300 active users. The big boost for ICE may come later this year when several major European utilities are expected to join the system.

Natsource LLC
140 Broadway, 30th Floor, New York, NY 10005
Contact: Trent Claughton
Phone: 403-215-5500
Fax: 403-215-5501
E-mail: tclaughton@natsource.com
Web Site: www.natsource.com

A joint venture operation with Tullett & Tokyo Liberty, Natsource operates an automated brokerage service that provides trading in a range of energy-related products such as power, natural gas and coal, as well as weather hedging and emissions allowances. Natsource' s client base includes roughly 600 firms within the utility, coal, oil and natural gas markets, as well as investment and commercial banks.

New York Mercantile Exchange/eNYMEX
One North End Avenue, World Financial Center,New York, NY 10282
Contact: Nachamah Jacobovits, vice president of corporate communications
Phone: 212-299-2430
E-mail: NJacobovits@nymex.com
Web Site: www.nymex.com

Still a few months away from its official launch, eNYMEX has announced a full slate of crude oil, petroleum products and natural gas contracts to be listed on its new automated system. The old Nymex Access, a proprietary electronic trading system launched back in 1993, now has 700 users and already lists all currently available physical commodity futures contracts and most of the options.

The exchange's target audience includes firms that currently participate in the OTC markets and that are drawn to the clearing services—including net portfolio margining—that will be provided by eNYMEX. Other Exchange members and market-makers are also expected to use the new platform.

Nordpool
P.O. Box 373, N-1326 Lysaker, Norway
Contact: Hartvig Munthe-Kaas, senior vice president of corporate communications
Phone: 47-67-52-8084
E-mail: information@nordpool.com
Web Site: www.Nordpool.com

Hidden away in the icy northern swath of Europe, a rather unlikely group of investors—owners of the Scandinavian power transmission grid—have managed to roll out a highly developed automated electricity trading platform and attract solid liquidity, although it is limited to a small regional market. Apart from spot trading in power itself, the financial markets facility of the Nordpool system also offers electricity futures and options.

The two types of options that can be traded and cleared at Nordpool are either European-style power options or Asian-style power options. The key difference between the two is that European-style power options have underlying instruments, whereas Asian-style power options are settled retroactively against an average benchmark price established during a specified period. The auction trading system is usually accessed by a dedicated line, although a few energy brokers have established their own dedicated lines.

Besides power suppliers in Sweden, Finland, Norway and Denmark, the 281 registered users of the financial markets service include commodity trading firms and a few hedge funds based in the United States as well as throughout the European Union and Scandinavia. Between physical and financial contracts, the system traded more than $7 billion in notional value last year.

Wiring Commoditie

Electronic trading of commodity derivatives has been slow to take off. Yet 2001 may be the year that the tide finally turns. Apart from standardized exchange-traded products, the global commodities business has all too often been characterized by a system of legacy distribution channels, complex multilayered sales forces, long-term lock-in agreements and the occasional sweetheart deal. The old "dine-'em-and-sign-'em” adage applies to this sector even more than it does to the incestuous muni bond world. Automated trading threatens to sweep away many of the nepotistic links in the industry, install the beginnings of global transparency and bring down sky-high transaction costs. While it is impossible to guess how quickly automated trading will advance, estimates suggest that within the next three years more than half of all trades in the commodities market will be conducted over the Internet. Many market participants, particularly in the power sector, already benefit from a substantial degree of in-house IT know-how, and are extremely comfortable adapting to new trading systems. And now that the dot-com collapse is in the history books, lessons have been well learned about how to avoid losing hundred of millions of dollars on crash-and-burn Internet business models. So far, electricity is by far the most prolific commodity being e-traded. Over a dozen Internet sites have sprung up, and with the Europeans just starting to join the bandwagon, at least a dozen more are in the pipeline. "There are too many power exchanges at present and the number is still increasing,” observes Peter Fusaro, author of Energy Derivatives: Trading Emerging Markets and founder of Global Change Associates in New York. "We're still in the first inning and there will be more and more systems coming on-line before the real consolidation phase even begins.” Although nobody dominates power trading, Connecticut-based Intercontinental Exchange is building critical mass. ICE is one of a trio of systems, the other two being Enrononline (www.enrononline.com) and Automated Power Exchange (www.energy-exchange.com), which already, on a net operating cash flow basis, are successful and profitable systems. Dynergy (www.dynegydirect.com) is emerging as a "mini-Enron,” and Houston Street (www.Houstonstreet.com) and Red Meteor (www.redmeteor.com) are gaining significant momentum in energy as well. "There are already too many power exchanges, and there will be more systems coming on-line before the real consolidation phase even begins.” —Peter Fusaro A number of vertically oriented European firms are also going on-line. Leipzig Power Exchange, Austrian Power Exchange, Amsterdam Power Exchange, Warsaw Power Exchange, Spectron and at least another six based in the United Kingdom, are among the generators/distributors that conduct sales and trading on the Internet. Still, these verticals have tended to stick to their own backyards. Apart from electricity, this year should mark the official birth of the era of Internet bandwidth trading. Although this sector has been nearly invisible since its voice-brokered creation in the last decade, rapid deregulation in the telecommunications market may soon make it the most liquid electronically traded product in the commodity universe. The market enjoys a relative uniformity and standardization of product and heavy participation by major electricity players eager to throw money at their telecom business. Although it is difficult to predict market leaders at this stage, likely contenders include energy giants like Southern Co., Enron, Williams and El Paso—all of whom have a telecom business—as well as Amerexbandwidth (www.amerexbandwidth.com), a Texas-based global broker making a market in everything from currency to crude. Systems that trade oil and gas over-the-counter products have also been slowly gaining liquidity, most notably Oilspace (www.oilspace.com) and Pepex (www.pepex.net). Trading volume on the International Petroleum Exchange (www.ipe.uk.com) reached record levels last year exceeding 25 million lots, an increase of 11 percent over the previous record of 23 million lots set in 1999. There have been market rumors indicating that the exchange may be the target of a bid by either ICE, OM or Deutsche Borse. The biggest sleeper, however, may be emissions trading. Natsource, Prebon, Cantor, and Tradition Financial Services are all among the players starting to position themselves. Trading CO2 credits only became possible after industrialized countries signed the Kyoto Protocol on Climate Change in 1997. Four years may be an eternity in the electronic derivatives trading industry, but since the signing of the international treaty, almost nothing has been done on the government side to actually implement trading practices. "Governments have failed to standardize agreements for the Kyoto Protocol, so I think private industry is going to step in, establish the necessary standards, and really make the market,” says Fusaro. Weather derivatives appears to be the one asset class not well-suited to automated trading. Although the market was introduced with a blizzard of press releases and gusts of hot air, many participants see weather turning into a market most similar to reinsurance contracts—with only a few voice-negotiated contracts per week. Tradeweather (www.tradeweather.com), the only site devoted to the weather market, is little changed over the last year, with its main telephone number set on semi-permanent voice-mail. —Ted Kim