A small acquisition announced earlier this month and scheduled to be complete by June is pointing American Power Conversion Corp. in a new direction: into the energy marketing business and e-commerce. APC has always been in the energy business in a sense. The West Kingston company has been keeping computers and electronics supplied with reliable power–even when the lights go out–for more than 15 years.
But APC’s pending acquisition of energyOn.com of Englewood, Colo., would put the manufacturing company in new territory. The privately held Internet site allows customers in deregulated energy markets to shop around for electricity and natural gas deals from providers in their area.
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EnergyOn.com, which charges energy providers a finders fee for referring new customers, is available for commercial and residential energy customers in parts of New York, Pennsylvania, New Jersey, Ohio, California, Virginia and Maryland. Although Rhode Island and Massachusetts also have passed energy restructuring laws, little residential competition has emerged here yet because potential competitors can’t compete with the rates charged by utilities.
Those rates are scheduled to increase steadily until true competition is sparked. The cost of power sold by utilities in Rhode Island, called the standard offer rate, increased last month to 3.8 cents per kilowatt-hour from 3.5 cents per kilowatt-hour. The change only affects what customers pay for power, not what they pay to have the power transmitted to their area and delivered to their homes.
APC officials didn’t disclose the terms of the energyOn.com purchase other than to say it was a minor transaction in the context of APC’s $1.3 billion in revenue last year.
“The most important part is that it’s symbolic of a new direction for APC, which is to lever into products that aren’t necessarily linked to the physical world,” said Aaron Davis, vice president of the company’s small systems group. That means e-commerce.
The goal of this new direction is to put the high volume of Internet traffic attracted to APC’s Internet site to use–through links to other sites, for example. EnergyOn.com, on the other hand, is suffering from a lack of hits.
“That’s one of the reasons we decided to engage with them. We have a surfeit of traffic. We have over 1 million unique visitors a month, which is phenomenal,” Davis said. “We see an opportunity to really leverage that traffic for energyOn.com so that they can meet their traffic requirements at no extra cost.”
APC’s Internet site will include prominent links to energyOn.com. And the Internet site will become a part of APC’s small systems group, but Davis said he doesn’t plan to change energyOn.com’s name or brand identity.
Although just 16 states had restructured their electric or natural gas systems or both as of Jan. 1, APC foresees an explosion of potential customers for energyOn.com. The company cites industry forecasts that predict all 50 states will enact utility restructuring legislation by 2005.
But energy isn’t the only industry with competition. EnergyOn.com likely will have to battle Essential.com of Burlington, Mass., for customers. Launched last June, Essential.com now boasts more than 20,000 active customers for energy and telecommunications services, according to the company.
Essential.com announced in early January its plans to expand from its home turf in Massachusetts. It plans to offer telecommunications services and Internet access across the country and energy in key markets including New York, California, Pennsylvania, Illinois, New Jersey, Delaware, Maryland, Nevada, Arizona, Connecticut and New Hampshire.
Both energy marketing sites point to analysts’ predictions that the number of Americans who shop online for goods and services will increase sharply over the next three years.
That’s good news for APC’s core power supply products, which are often used to protect the many computers and servers of dotcom companies. It’s also good news for APC’s plans to try its hand at other e-commerce ventures.
“The other piece is leveraging this additional traffic into other products and services, preferable that you can buy with a click,” Davis said.
The company is evaluating e-commerce opportunities to supplement energyOn.com. It is looking for products that visitors to its main Internet site would be interested in, those that provide “security and piece of mind,” Davis said.
