In the News
ConsumerPowerline Joins Demand Response Buying SpreeDow Jones VentureWire
January 31, 2008
The pressure to consolidate in the demand-response and smart-grid market has forced another merger, as WebEnergy.net Inc., which does business as ConsumerPowerline, said it acquired Xtend Energy Inc.
It's the latest in a wave of mergers that have swept through the demand-response marketplace. Earlier this month BPL Global Ltd., a smart grid software and technology company, bought Connected Energy Corp., which develops demand-management technologies. Earlier in the month the company announced the acquisition of Portland, Ore.-based Serveron Inc., which monitors and services transformers.
Late last year, publicly traded demand-response technology and service providers Comverge Inc. and EnerNoc Inc. made acquisitions of their own, buying Public Energy Solutions and MDEnergy, respectively.
Financial terms of the latest ConsumerPowerline acquisition were undisclosed but it was a stockand- cash acquisition. Through the deal, ConsumerPowerline expands its demand-response services to include what the company calls the rapid response market. Rapid response services involve reducing load in situations where customers are given a 10 minute notification to supply excess capacity in response to sudden events, the company said.
That differs from traditional demand-response services that involve notification times that can range from 30 minutes to two hours, ConsumerPowerline said. Austin, Texas-based Xtend Energy was among the first to develop rapid response services for the deregulated Texas market, the companies said.
Xtend Energy focused on providing its services to industrial facilities, initially in Texas, but the company has since expanded into New England and the Mid-Atlantic region, according to Xtend Energy Chief Executive Officer Malcolm Smith, who will become the executive vice president of the industrial vertical within ConsumerPowerline. He spoke in an interview. Rather than dealing with reducing load through minor cuts in power consumption across a number of different users, Xtend Energy responds to calls from utilities by reducing consumption on the order of a megawatt at a time, ConsumerPowerline Chief Executive Officer Gary Fromer said in an interview.
"You need 10,000 homes up to have the type of impact that they're getting out of one or two customers," Fromer said.
Indeed, one of Xtend Energy's customers is the oil-and-gas exploration and production company Basa Resources. "We are an oil and gas company and we burn a lot of electricity," said Basa President Mike Foster, in an interview. "We spend probably $12 million to $13 million a year on power."
Basa cut its costs by $1.5 million through payments from Xtend, Foster said. The addition of Xtend gives ConsumerPowerline an immediate boost in terms of revenue as well. The Texas-based company generated around $10 million in revenue in 2007 from work it had contracted with 40 customers, according to Smith.
Last year New York-based ConsumerPowerline raised $17 million in its first round of institutional financing from investors including Schneider Electric, Expansion Capital Partners, Bessemer Venture Partners, New York City Investment Fund, and Vantania Holdings. Xtend was backed by undisclosed insiders.