Robert Green

Downtown Kansas City, home for UtiliCorp United, the parent of Aquila Energy, has lately been revitalizing itself with an urban face lift involving more than a billion dollars in current construction, and hundreds of millions on the drawing board. Interestingly one of the fancier pieces in the proposed make-over is an entertainment center called the Power and Light District. But any association the name of the new district draws to the energy giant, UtiliCorp, is merely coincidental. For one thing, the city's Power and Light District is intended to be fun. It will house 30 movie screens and several restaurants, shops and some office buildings.

UtiliCorp United, on the other hand, is all business. In fact, the sun never sets on its properties and operations around the world. Now, with the completion and dedication of Aquila Energy's expanded trading floor in downtown Kansas City, UtiliCorp expects to continue its legacy of hard work and penchant for growing its business units. The Aquila subsidiary ranks among the largest wholesalers of natural gas and electricity in North America.

As for other parallels, any similarities between the Power and Light District and Aquila's mission to market electricity and natural gas are more literary than real. Like many urban renovation projects, the Power and Light District has encountered a number of financial, political and marketing obstacles. And its completion is still some time away. But Aquila built its trading floor in less than 90 days. "And then," says Robert K. Green, chairman of Aquila and president and COO of UtiliCorp United, "over a 12-month period we brought together Aquila's diverse operations from Omaha and a Kansas City suburb, moving 405 people to Kansas City's central business district."

Apparently, there were few start-up glitches that usually plague new operations or new locations. In the first six months, Aquila increased profits 141 percent and bumped its sales up 39 percent.

Today, the company completes some 20,000 transactions a month worth about $60,000 worth of business every minute in a 24-hour day. That makes it a leading wholesaler and risk merchant of energy and energy-related products. As Green points out, in 1999 Aquila sold enough electric power to keep greater Kansas City running for 20 years (and the Power and Light District lit up, presumably for a lot longer). In the first six months of this year Aquila Energy's earned $83.7 million on sales of $9.5 billion.

To deal with its monthly transaction volume, Aquila needed to create a state-of-the-art, and then-some, facility. "Aquila is one of the very few companies in the energy sector that is well-positioned to take advantage of the opportunities in this new, increasingly networked economy," says Keith Stamm, CEO of Aquila. Some of the equipment and technology that Aquila incorporated into the new trading floor include these:

* More than a million feet of cable for voice and data communications.
* 450 desktop computers, 650 computer monitors and 29 computer servers.
* Computer data storage totaling 1,400 gigabytes, which is enough data storage capcity to electronically     file everything in 149,000 copies of the Merriam Webster Collegiate Dictionary.
* Six tons of batteries for its redundant, uninterruptible power supply.

In addition to the costs of constructing and equipping its trading floor in downtown Kansas City, Aquila also has invested an initial $50 million to develop its e-business portfolio that involves among other things an interactive web site for its Guaranteed Weather products. At the opening ceremonies this past August for its new consolidated energy trading floor, Aquila officials also announced its intent to continue its efforts to create an Internet trading platform for natural gas, electric power and other related commodities. In talking about the project, Beth Armstrong, senior vice president and head of Aquila's e-business programs, said, "The Internet is fundamentally changing the way business gets done and we intend to be in front of that wave."

Earlier this year Aquila joined with five other energy companies to establish an Internet trading platform. Together these six companies, Aquila, AEP, Duke Energy, El Paso Energy, Reliant Energy and Southern Energy's SEI WorldWide, account for nearly 40 percent of the electric power and 30 percent of the natural gas traded in North America.

This group of six also recently joined with the Intercontinental Exchange to form the world's largest Internet trading platform for energy and energy related products.

You can't be much farther ahead of the wave, as Armstrong pledged in further developing the Internet portfolio, than guaranteeing the weather. Aquila has been a pioneer in developing weather derivative products, issuing the industry's first weather derivative hedge four years ago. Currently, world wide there are about $2 to $3 billion worth of weather hedges held by global companies in wide variety of industries including energy companies, agricultural firms and state and city governments that deal regularly with such things as snow removal budgets. Aquila markets more than 30 different products under its GuaranteedWeather brand. differs from other weather-related sites in that it offers business one-stop access to all the tools and information needed to understand and manage weather risk. "Our site offers custom-made contracts for hundreds of cities around the world," says Ravi Nathan, portfolio manager for Aqiuila's weather desk, "and we can provide access to the latest forecasts and historical weather data."

In addition to, Aquila plans to interface with the New economy by introducing additional platforms that bring buyers and sellers together to provide commodity and service offerings for commercial and industrial customers. Aquila believes that the market place will seek cost efficiencies by replacing the high-cost buyer and seller discovery process with an automated auction platform.

One product that Aquila expects to launch before the end of the year is, which is designed to be an independent, web-based auction platform bringing together retail load aggregated by the emerging e-procurement platforms with retail suppliers. The platform is expected to accomplish the following:

* Extend energy suppliers' market reach.
* Reduce the cost to the customer.
* Provide additional products and services to the retail suppliers to help them manage risk and package the product for retail customers.