Keystone Energy Services - KESE on BB Nasdaq Message Board

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Gold/Mining/Energy : Keystone Energy Services - KESE on BB Nasdaq

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To: Olav who wrote (159)	1/21/1998 7:13:00 PM
From: Eric Shih	Read Replies (3) of 307

KEYSTONE REVEALED This is a horrible company and I will tell you why. I am very well connected wthin the industry. The key to this industry is being able to buy the electricity at a good price. Can Keystone do that is the question. They claim that they can rduce bills by 10-25% this is a blatent lie. That is from the bottom of their press releases on Yahoo. The only thing they can deliver is the electricity portion of the bill. This represents about 25% of an entire bill. From talking with Keystone they will not take any bill that is under $150 because they don't think there will be any profit. At least they are that smart. So how much can they buy under the PX price. The PX price is the price at which customers will pay if they stay with their local utility. All there deregulated utilities (SDG&E, SCE and PGE) must sell to the PX and then buy the energy back at a market price. Other Energy Service Providers (ESP's) can buy from the PX as well. Keystones profit rests on the fact by how much they can beat the PX because their price is based on the PX. They use something called percentage of savings with their customers. Lets say the utility is charging (the PX price)is 10 cents they can buy for 9 cents the price, they will now charge the customer will be somewhere in between. They can split the difference 50-50 with the customer, they can split the difference 60-40 that is up to them and the customer. So how much they can beat the PX price if at all directly effects how much they will earn. It is not impossible to beat the PX, but very very difficult. Keystone will have a hard time. There are two reasons for this. 1) Expensive electricity plants that were also going to sell to the PX backed out in the final months. What does this mean? This means that the electricity on the PX will be the cheap electricity. Although some will say this is not true because less electricity will be sold on the PX because these plants backed out is wrong because there will be less buyers. These plants went around the PX and made private deals. 2) Keystone does not currently have an energy deal to my knowledge. I have called investor relations numerous times and they will not tell me who these deals are with sighting confidentiality. This is most certainly not confidential! In fact if they are taking title to the electricity outside of California they will have to file with FERC (Federal Energy Regulatory Commision) Where this energy is coming from. On their web sit www.kese.com they claim to have aligned with another company but there is not mention of whom. Also, on the front page thay claim to save customers 10-25% as well. That is fraud. I will also point all of you out there to an article highlight the realistic options for power. www.ucan.org They do not mention keystone and also say that if anyone offers a discount of more than 2-4% which is realistic then they are a fraud. The final point I will make today is that I will point to an energy deal which was very near completion in the industry. The California Manufacturers Assoc. (CMA) went to Montana Power and created a deal where they would buy energy for all of their members (Just the energy portion) for 8% below the PX price. The CMA is the largest political force in California and thus they could command that price. Their members have the highest volume by dollars and usage of any organization in California. However, even this deal industry sources say is in jeopardy. If the largest entity can not even purchase at 8% below the PX, what do you think that Keystone will be able to purchase at? In summary, Keystone claims way too much. I doubt that they will meat the expectations that they claim. On their web site they "claim" that cogross profit margins will be 16.5% in 1998 18.5% in 1999 19.2% in 2000 and over 20% in 2001. Not only is this an impossibility if you know anything about the industry but completely misleading. The Final point I will make tonight is to comment on a quote taken directly from their web page. This is not out of context. "BECAUSE OF YOUR SIZE . As a small to mid-size utility user, you are paying rates 23% to 56% higher than some California corporations. Fortune 500 companies with loyalty to the "bottom line", are saving billions of dollars in the various utility industries because of their overall buying power." I would like them to name me one fortune 500 company that is paying anwhere close to 56% higher rates than a mid size user does. The only way this would be possible is that if all of their electricity was used at night, which does not happen for most fortune 500 companies. I invite any Bulls on this stock to respond. Also feel free to call investor relations and ask them any of the problems I have outlined here. ALL ABOVE IS MY OPINION AND MY OPINION ONLY. I BELIEVE ALL OF WHAT I HAVE STATED TO BE TRUE, BUT EVERY INVESTOR SHOULD DO THEIR OWN RESEARCH BEFORE BUYING OR SELLING ANY SECURITY.

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