ScottishPower, Endesa, Edf, and Others Will Launch Electronic Procurement Exchange

ScottishPower announced today that the company has become part of a group of 12 leading utilities from across Europe entering into an initiative expected to lead to the launch of an independent industry procurement exchange. 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. In addition, the exchange will be designed to improve the efficiency of procurement, supply chain management and capacity utilization. The founding partners will work together to make the exchange attractive for all companies by establishing a collaborative platform for all industry participants. The estimated collective annual procurement spend (including capital expenditure but excluding labor and fuel) of the founding partners exceeds Euro 30 billion.

The founding members of the new exchange are ScottishPower (UK), Endesa (Spain), Edf (France), RWE (Germany), Enel (Italy), Ibederdrola (Spain), Electrabel (Belgium), United Utilities (UK), Northern Electric (UK), Vattenfall (Sweden), National Grid Company (UK) and NUON (Netherlands). Discussions are already underway with further important partners and participants expected to join shortly.

In the first phase the focus will be on catalogue purchasing, forward and reverse auctions and procurement management information. Any supplier large or small can participate and the approach will benefit all suppliers by giving them greater market reach and reducing transaction costs. The consortium intends to begin Internet-based trading by late Summer 2000. The partners plan to use the exchange for a substantial proportion of their procurement.

An independent company will be created to own and operate the exchange. Initially, the founding partners will own around 80% of the equity in the new company. The remainder will be allocated to other industry partners (including suppliers), management, staff, advisers and technology providers.

A robust, scalable, open, and independent technology platform will be chosen following a thorough evaluation of alternative providers. It is intended to prepare the company for an initial public offering (IPO) in the future. Appropriate regulatory approval will be sought for the initiatives.

Ken Vowles, Executive Director of ScottishPower's UK Power Operations, said: "These leading European utilities have come together to improve performance, productivity and capital efficiency. This initiative is an exciting example of the application of the internet to promote efficiency and innovation in an industry and throughout the supply chain."

Edited by Stephen Heiser