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UtiliCorp, Peco join AT&T
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June 24, 1997: 9:27 p.m. ET
Regional utilities team up with long-distance provider to form venture
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NEW YORK (CNNfn) - Faced with deregulation in their markets, UtiliCorp United Inc. of Kansas City, Mo., and Peco Energy Co. of Philadelphia said Tuesday that they will join with AT&T Corp. to provide consumers with one-stop shopping for a range of utility services from natural gas to the Internet.
The new venture, to be named EnergyOne, will be capitalized with $22 million. It represents the first initiative of its kind among electric utilities struggling to preserve market share in an era of deregulation.
The venture is modeled after the Visa credit card concept, in which local franchisees share the high costs of national marketing campaigns.
A local utility would sign up with EnergyOne to make its services available on a national basis, paying a fee to gain national marketing clout. AT&T will handle the billing process and customer service, and market long-distance and local phone services.
Also involved as part of the venture is ADT Ltd., which will market home-security services.
Organizers hope to have 15 franchisee-utilities sign on by the end of 1998.
Analysts expect this deal to be the first of more to come.
"Whether you talk to Southern Co. or any company in the industry who's deciding to stay in the generation business and market power nationally, they've all talked about doing deals with phone companies," said Andrew Levi, a utility analyst at Furman Selz. "I expect MCI to get involved, [as well as] Sprint and all the others. It makes sense."
In the past, UtiliCorp has tried to market the EnergyOne brand name, only to discover -- after spending $20 million over a two-year period -- that it was too expensive for a company to go it alone.
However, now regional utilities face new competition from super-sized utilities such as Enron Corp. of Houston and Southern Co. based in Atlanta, which have tens of millions of dollars for national advertising campaigns.
Peco and Utilicorp will market EnergyOne's services in their respective regions. AT&T will provide backroom services and sell its own long-distance service, eventually branching into the local phone markets.
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