Lights Dimming at New Power?

By eweek  |  Posted 2001-10-29

AOL, Enron and IBM jumped into the online energy retailing business last year, but it looks like their creation, The New Power Co., is running out of juice. Declining cash reserves and an increasingly competitive market may spell doom for the company.

New Powers goal is to capture residential and small-business customers in states that have deregulated their electricity and natural gas markets. The company has met with some success already, signing up more than 700,000 customers in 10 states.

But New Power — which will report its third-quarter earnings on Nov. 8 — is running low on cash. According to Securities and Exchange Commission documents filed in August, New Power lost $55.6 million on $64.6 million in revenue in the quarter ended June 30, and has burned through $140 million in cash this year.

Earlier this month, Enron, New Powers biggest investor, wrote down its investment in the company by about $250 million. A few days later, New Power and Enron agreed to a deal that gave the upstart more unrestricted cash, bringing its total cash reserves to about $79 million. But New Powers SEC filings also noted that it will need additional financing to stay in business.

Chris King, the former CEO of, an online energy retailer that burned through $58 million before it failed in March, said that New Power has "an uphill battle, for sure." Every company that has tried to sell energy to residential customers in deregulated states has had a difficult time, because the business has low margins and customer acquisition is difficult and expensive, King said.

Another online energy retailer,, folded last month, after burning through an estimated $100 million in venture capital.

Despite the obstacles, Gael Doar, a New Power representative, insisted that the company will survive. "Weve been in business for a year and have learned a tremendous amount," Doar said.

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