|
Focus: New Power, new stock
|
 |
October 3, 2000: 6:06 a.m. ET
New Power plans to become national e-commerce power company
By Staff Writer Kim Khan
|
NEW YORK (CNNfn) - New Power is still offering the same old power - electricity and natural gas - but it lives up to its name by offering it in a completely new way.
The company wants the ability to get cheap power as easy as flipping a light switch, or at least clicking a mouse.
The New Power Company, known officially by its abbreviation TNPC Inc., hopes to be "the first nationally branded provider of electricity to residential and small commercial customers in the United States." To fund that ambition, it plans to raise $399 million this week in an initial public offering.
According to sector analysts it has a good chance, being the first company to foray into the wilderness of energy deregulation.
TNPC's strategy is straightforward - sell electricity and natural gas over the Internet and below market price. The company will buy gas and electricity at wholesale prices and a pay a fee to local providers for the use of lines or pipes and save on overhead through its e-commerce model.
What is not so clear is how TNPC will perform, given that lack of comparable companies.
"It's brand new and whatever was done in the past has no bearing," Donato Eassey, energy analyst with Merrill Lynch, said. "It's really a different animal altogether."
Selling energy online
The official company was founded as a unit of Enron (ENE: Research, Estimates), the top energy broker in the country. Enron's retail energy unit gave TNPC its current customer base of about 325,000 customers.
In 1999 the Greenwich, Conn.-based company had revenue of less then $8 million and lost more $25 million, but analysts said it is difficult to determine how TNPC will do once it is out of growing stage.
"They have the makings to be a very formidable player," Eassey said. "Their strategy is well rounded to execute on the residential level."
According to TNPC's SEC filings the company's strategy includes targeting favorable markets and pushing its e-commerce model with advertising through America Online (AOL: Research, Estimates).
Much depends on how states proceed with deregulation. TNPC currently operates in New Jersey and Pennsylvania, plans for upcoming service in Georgia and Ohio and expects to operate in Massachusetts and Texas next year.
Other deregulated markets include Maryland, Nevada, Virginia, and Connecticut.
While there are no direct competitors for TNPC, the company expects a number of companies to follow into the market and competition to be intense, depending on what legislation is enacted by the individual states.
Will the offering spark?
TNPC plans to raise about $399 million with its initial public offering, pricing 21 million shares between $18 and $20.
It's a large offering, but not too big to quell what analysts say should be a strong opening day.
"This is the early salvo of the next generation of utility firms," said Irv DeGraw, IPO analyst and research director and WorldFinanceNet.com. "It's a pretty big deal but should still have a pretty solid debut."
But DeGraw said because the company is a pioneer the long-term outlook for the share price is very speculative.
Enron will own 56.6 percent of the company after the offering, which is being co-managed by Donaldson, Lufkin & Jenrette and Credit Suisse First Boston.
TNPC will trade on the New York Stock Exchange under the symbol "NPW." 
|
|
|
|
|
|
New Power
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
