On-line Energy Trading

1. Enron Online re-born as UBSWenergy.com

When Enron Online got back into the energy trading market, it was as UBSWenergy.com and backed by one of the world's largest financial services groups, 650 experienced traders and Enron's state-of-the-art trading floor in Houston. It is no longer in the wholesale energy trading market, but is trading gas and power to service existing customers. Its first priority has to be to regain the trust and confidence of the market of which it once had a 60% share, especially among counterparties and end-users that may have lost millions in the collapse of Enron. More significantly, two online trading competitors, Intercontinental Exchange (ICE) and TradeSpark, have secured many of EnronOnline's former customers. Finally, and most significantly, the one-to-many, proprietary platform that EnronOnline spearheaded and carried to great success has subsequently fallen out of favour and has been replaced by the many-to-many, neutral format which ICE, TradeSpark and others are using. Importantly, UBSWenergy.com has been able to retain some of the leadership that took EnronOnline to the top spot, including Louise Kitchen, who is credited as the mastermind of the Company's online trading business, who remains on the Board, and Greg Whalley, former president and chief operating officer at Enron, who is head of UBS Warburg Energy.

2. The Changing Market for On-Line Energy Trading

Atlanta-based ICE is backed by the credit and liquidity of some of the biggest financial houses and trading companies, including 8 US and European finance and energy companies - BP, Shell, Goldman Sachs, Morgan Stanley, etc. TradeSpark is a product of a partnership between eSpeed, Cantor Fitzgerald and 5 energy partners (Coral Energy, Dominion, Entergy-Koch, TXU Energy Trading and Williams). Both ICE and TradeSpark were gaining momentum before the collapse (despite being shutdown for 10 days after September 11th), and that momentum has accelerated.

The issues that will continue to challenge and shape the online energy trading market include:

• The need for neutrality,
  
• Inevitable consolidation in the market, and,
  
• The ongoing struggle to gain liquidity.