Convergence Commoditization: A Survival Guide for Corner Grocery Store Owners (And the Private Power Industry)

Abstract

Th e Pacificorp acqui sition of The Energy Compan y, last year,
which is itself a fuel and power marketing amalgam , served to empha-
size to the private power indu stry an ascending ladder of realities:
• The PURPA-ba sed IPP industry is history (Old News)
• Linkage of pow er marketers and fuel suppliers is a logical de vel-
op men t (Accep ted Wisdom)
• "Con vergence" of en erg y suppl y techniques will be the foundation
of the new con solidated energy industry (Rapidly Accepted Wis-
dom )
To clin g to this newe st rung of the ladder , private power indu str y
m emb ers face a clas sic quandary : finding an appropr iate re sponse to the
der egul ation genie whose escape from the regulatory bottle it has so
lon g p romoted . The challenges are clear enough : prevent unfair exercise
of comp etitive advantage by the new convergence mega-c ompanies ; fa-
cilitate merchant project financing in the ne w world of shorter term en-
ergy arr ang ements; reestablish a useful, functional role in the foreshort-
ened en erg y food chain. In short: figure out what to sell from the corner
grocery once the supermarket comes to town.
The trick , of course, is to do all of these things without taking po-
sitions or establishing strategic business alliances which inadvertentl y
ha ve the effect of perpetuating the old regulatory order.