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Gold/Mining/Energy : Keystone Energy Services - KESE on BB Nasdaq -- Ignore unavailable to you. Want to Upgrade?

To: Dale Moeller who wrote (197)	3/29/1998 1:49:00 PM
From: Arthur O'Donnell	Respond to of 307

Do what you want to with your money, but consider this: Because of the mandated 10 percent rate reduction, a four-year freeze on current rates and the liability of repaying utility stranded costs over the next four years, there is very little incentive for customers to switch energy service providers. That shows in the fact that fewer than 20,000 residential customers have requested a new supplier to date. About 40 percent of those are signing up with "green marketers" and are willing to pay more for energy Keystone is not among them and does not target residentials because their is no money there. So don't count on a potential market of 30 million people. The best deals currently being offered to big customers are a 5 percent to 8 percent reduction off existing tariffs, and the companies who are making those offers KNOW they will be losing money. As for Keystone's income projections--6 MW does not translate to $6 million in revenues. They will only see the energy portion of those bills--roughly 30 percent of the total. They will also incur costs of procurement, transmission and market entry--even if they get all their power on the spot market through NCPA, they will only slightly undercut the Power Exchange price. I see thin, if not negligible margins here for four years. I'll close with an observation from JK Galbraith on the stock speculations that led to the crash of 1929, which he believed was characterized by "the vested interest in euphoria that leads men and women, individuals and institutions to believe that all will be better off, that they are meant to be richer and to dismiss as intellectually deficient what is in conflict with that conviction." Blessings.