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************************************************************************ Search SCIENTECH's PowerHitter archive to read about our interview with a leader in the industy: http://www.consultrci.com/web/infostore.nsf/Products/PowerHitter ************************************************************************ =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, October 27, 2000 Toronto Hydro, Ontario Power Generation Launch EBT Express 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 Toronto Hydro Corporation and Ontario Power Generation announced that they have launched an electronic business transaction (EBT) "hub" that will provide centralized electronic data management and transaction services to local distribution companies (LDCs) and energy retailers in Ontario. Called EBT Express, the exchange will become operational when Ontario's new competitive electricity market opens next spring. Excelergy eXACT=01v, developed by energy software solutions company Excelergy Corporation, will provide the technology infrastructure for EBT Express. ANALYSIS: This is a significant development, as EBT Express represents the first hub in Canada for retail energy transactions. The site will serve as the central clearinghouse for immediate communication of customer data among hundreds of LDCs and energy retailers in Ontario, and possibly=20 throughout Canada. I spoke yesterday afternoon with George Caraghiaur, Exelergy's vice president, Canada, about EBT Express. Caraghiaur believes that the site "will provide the essential technology for opening Ontario's electrici= ty market in an efficient manner." That is no small undertaking as there are an expected 300 players that will need to communicate with each other in Ontario once competition begins. Deregulation is happening in Canada on a province-by-province basis (much like it is happening state-by-state in the U.S.). Thus far, only Ontario and Alberta have set dates when electric customers will be able to select a new energy supplier. Ontario is scheduled to become competitive next spring, and presently is the only region in which EBT Express will be=20 operational. Alberta uses a point-to-point transaction process, which represents a very complex model. Caraghiaur believes that the value of EBT Express will be clearly seen, and there will be many opportunities for the hub in Alberta and elsewhere. The Ontario Energy Board (OEB), which is the equivalent of a state PUC, mandated the use of electronic business transactions (EBTs). The EBTs work as follows: Once a customer selects a new energy supplier, the energy suppl= ier and the local distribution company (LDC) must continue to share information about that customer. This proprietary data, shared strictly on a one-to-one basis between the energy supplier and the LDC only, will include billing, usage and payment information. Essentially, an LDC will read the meter and send usage information to the energy supplier, who will calculate its portion of a customer's bill and in turn send this data back to the LDC, which will submit the customer bill. This represents a common way for billi= ng in Ontario, although there are other options including consolidated billing that originates from the energy supplier and split billing coming from both the LDC and energy supplier. No customer information will be exchanged until competition officially begins in Ontario, which now appears to be in the spring of 2001, although the technology infrastructure supplied by Excelergy is already in place. In response to the OEB's mandate, Toronto Hydro Corp. and Ontario Power Generation=01*the largest players in electricity distribution and generatio= n in Ontario=01* became equity partners in the $7.7 million joint venture to create EBT Express. All customer data will be contained within EBT Express, which is supported by the eXACT technology. Excelergy eXACT is a software solution that translates, validates, manages and delivers data exchanged among users. The functionality of eXACT has been used in several U.S. state= s, including Pennsylvania and New Jersey. In fact, eXACT was introduced to gas and electricity retailers in the United States in 1999 as a component of Excelergy ABP=01v, a billing and customer information solution. Alleghen= y Energy Supply, a subsidiary of Allegheny Energy, was one U.S. utility that I know of that used the Excelergy technology. Caraghiaur contends that EBT Express will play an important role in enhanci= ng the competitive market in Ontario. "There are presently 37 licensed retaile= rs in Ontario, 15 pending retailers and 246 LDCs," Caraghiaur told me. "You can imagine the cloud of communication pathways that would occur between all these players without a centralized hub such as EBT Express." The numbe= r of LDCs seemed awfully high to me, but Caraghiaur explained that in Ontario many LDCs serve only a small number of customers, often 100 customers or less. This should change as consolidation reduces the number of LDCs in Ontario but, when compared to the United States, Ontario still will have a comparatively high number of distribution companies. Caraghiaur cited Pennsylvania as an example of a market that has tried to assimilate communication among many market participants. Pennsylvania, along with most other U.S. states, still uses electronic data interchange (EDI) as its standard, wherein every LDC has a slightly different=20 interpretation of data that is shared through the EDI. This can often cause communication inconsistencies and retailers may have a difficult time in getting ready for deregulation. "EBT Express will be in the position to enforce standards= ," says Caraghiaur. "The use of XML in particular will enhance communication between market participants." In fact, XML (extensible market language) is the cornerstone of eXACT as it constructs a standardized language so that data can be exchanged but still understood by different applications. Caraghiaur claims that Excelerg= y is on the forefront of XML technology, which was expressly stipulated in the EBT standards developed by the Advisory Committee to the Ontario Energy Board. XML is a common language used on the Internet that makes it easier and more cost-effective for buyers and sellers to exchange data between applications and data sources that otherwise might have been incompatible. In addition, Excelergy's eXACT software is object-oriented, allowing for easy and rapid change from one program to another. Clearinghouse exchanges are definitely a trend in the energy industry. Whereas states that previously deregulated, such as California and=20 Pennsylvania, did not use a centralized clearinghouse for customer information, states and provinces now formulating their restructuring plans often mandate them. For instance, Excelergy's competitor Logica has a market data clearinghouse built for the Midwest market. Also, the ERCOT-ISO has teamed with Andersen Consulting on a similar market data clearinghouse for the Texas unbundling, scheduled for pilot in the summer of 2001 and full market opening in Januar= y 2002. One concern that market participants may have is the sharing of customer data through EBT Express, especially when it is backed by potential=20 competitors in the Ontario market such as Toronto Hydro and Ontario Power. Caraghiaur responded to this by saying that the OEB mandated the exchange of customer information through an EBT structure. However, market participants are not mandated to participate in EBT Express. They could opt to still exchang= e information on a point-to-point basis, although Caraghiaur believes that EBT Express offers a much more efficient forum for the transfer of customer data. In addition, Caraghiaur reiterated that no proprietary or competitive information would be accessible between any parties other than the LDC and energy supplier involved in the exchange. Interestingly, Toronto Hydro and Ontario Power may be competitors when the Ontario market opens next year. Toronto Hydro Corp. owns Toronto=20 Hydro-Electric System Limited, a regulated electricity distribution system, and Toronto Hydro Energy Services, a competitive energy service company. Ontario Power Generation is an electricity generating company, so Toronto Hydro and Ontar= io Power will be competing on the retail level to acquire energy supply contra= cts with lucrative customers. And rumor has it that venerable retail giant Sears is also taking a look into becoming an energy retailer in Canada next year. As Canada continues to deregulate and attract energy suppliers, Excelergy anticipates that the EBT Express could serve a national market. =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 For a an in-depth perspective on the market potential of distributed=20 technologies, SCIENTECH is offering Stephens Inc.'s (Investment Banker) 97-page report, "Powering the Digital Economy" on its Website at: http://www.consultrci.com/web/infostore.nsf/Product-Preview/UtilityAdvisor free for a limited time only. =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 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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