Sempra takes stake in Utility.com, gains gas customers

Sempra Energy Trading, Stamford, Conn., and Utility.com on Thursday unveiled plans to provide natural gas to consumers in deregulated markets via Utility.com's internet site.

Under the terms of the agreement, Sempra will become the preferred wholesale gas provider to Utility.com. It also has taken an equity stake in Utility.com, with the right to make an additional investment in subsequent private financings. The company is not disclosing the amount it's investing in the partnership, said a company official.

Using the internet to reach consumers in the deregulated market is an important avenue, said Steven J. Prince, chairman and CEO of Sempra Energy Trading. Through the partnership, Sempra will gain access to millions of new customers.

The deal allows Utility.com to offer competitively priced gas to residential and small commercial customers in Pennsylvania and California, both deregulated states. The firm eventfully will offer competitively priced gas nationwide, says Chris King, CEO and founder of Utility.com. The deal also enables the company to offer additional products and services to its customers, solidifying its brand as a "true internet utility company," King said.

Using the internet to offer service to customers could cut down on the costs of sending bulk mail to residential customers or sending independent agents out to recruit them, sources said. Because the deregulation of the power markets is being done state by state instead of nationally, however, figuring out the rules in each state can be cumbersome for outside companies. In New Jersey, for example, a "wet signature" or actual ink signature on a form, is required to sign customers up for gas and power service. Other hurdles might include rate caps or high distribution charges due to stranded costs. Many of these markets are still going through shake-outs as they try to find a new way of working after deregulation.

Utility.com currently offers electricity, gas, telephone, and internet access services. It also offers digital subscribers line (DSL) and internet telephony.