European utilities form procurement exchange

Twelve European utilities have formed an initiative to launch an independent industry procurement exchange. The estimated collective expenditures of the founding partners, including capital expenditure but excluding labor and fuel, exceeds 30 billion euros/year.


Twelve European utilities have formed an initiative to launch an independent industry procurement exchange. The estimated collective expenditures of the founding partners, including capital expenditure but excluding labor and fuel, exceeds 30 billion euros/year.

Founding members include ScottishPower PLC, United Utilities PLC, Northern Electric PLC, and National Grid Co. PLC, all of the UK; Endesa SA and Ibederdrola SA, Spain; Electricit�e France Group, France; RWE AG, Germany; Enel SPA, Italy; Electrabel, a unit of Suez Lyonnaise des Eaux, Belgium; Vattenfall AS, Sweden; and NUON, the Netherlands. Discussions are already under way with other potential partners.

The exchange will provide an electronic marketplace open to both buyers and sellers in the utilities industry. The initial focus will be on the European electricity and water industries. The consortium intends to begin internet-based trading by late summer.

In addition, the exchange will be designed to improve the efficiency of procurement, supply chain management, and capacity utilization. In the first phase, the focus will be on catalog purchasing, forward and reverse auctions, and procurement management information. Participation is not limited to size.

An independent company will be created to own and operate the exchange. Initially, about 80% will be owned by the founding partners with remainder reserved for other industry partners, management, staff, advisers and technology providers.

A scalable, open, and independent technology platform will be chosen following evaluation of alternative providers. The partners intend to prepare the company for an initial public offering in the future. Appropriate regulatory approval will be sought for the initiative.

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