UtiliCorp Unit Joins With Shell in Australian Marketing Venture

Business Editors  KANSAS CITY, Mo.--(BUSINESS WIRE)--March 8, 2000--Continuing to leverage its investments in growing international energy networks, UtiliCorp United (NYSE:UCU) today said that Melbourne-based United Energy Limited, 34 percent owned by UtiliCorp, was joining with Shell Australia Limited and two other Australian energy companies to capitalize on deregulation of the national Australian electricity and gas market.  Referring to the action as described in the news release reprinted below, Robert K. Green, UtiliCorp president and chief operating officer, said, "This is a move to increase services to the customer and further strengthen and lock in the value of our investment."  Note to editors: The following news release was issued in Melbourne, Australia Wednesday, March 8. All financials are expressed in Australian dollars.  NEW NATIONAL ENERGY RETAILER ANNOUNCED  MELBOURNE -- Four of Australia's leading energy companies intend to form an energy retail company to capitalise on deregulation of the national Australian electricity and gas market.  United Energy Ltd, Energy Partnership (Ikon Energy Pty Ltd), Shell Australia Ltd, and Woodside Energy Ltd, will form Pulse Energy which will initially service more than one million Victorian customers with the aim of rapidly becoming a national energy player.  The transaction is subject to final documentation, financial close, and banking and regulatory approvals.  With retail energy markets becoming contestable next year, Pulse Energy will provide Australia's first large-scale combination of electricity and gas services and have access to potentially 10 million energy customers in Eastern Australia commencing January 2001.  Customers for Pulse Energy will come from the existing Victorian electricity retail business owned by United Energy and the gas retail business (Ikon Energy), owned by Energy Partnership (AMP and UtiliCorp). Through deregulation of the Victorian electricity and gas businesses, it is expected that every Victorian electricity and gas customer, regardless of size, will be able to buy energy from a retailer of choice during 2001.  Effective ownership of Pulse Energy will comprise Shell (40%), United Energy (25%), Energy Partnership (25%), and Woodside (10%).  Chief executive officer of the new company will be Nigel Kuzemko, who brings 17 years of experience with a range of international energy companies.  Pulse Energy will grow from the substantial customer base of United Energy's 560,000 electricity customers and Energy Partnership's (Ikon Energy) 520,000 gas customers. This customer base, which Pulse Energy will service, includes a substantial overlap of customers who already purchase electricity and gas from United Energy and Ikon; a unique mix in Australia's energy retail market.  Shell will provide strong brand equity, retail channels, and cash to Pulse Energy, as well as an established customer loyalty program. Woodside will provide potential access to a long-term, competitive gas supply and $27 million in cash. The balance of Pulse Energy's cash needs will be met by non-recourse debt.  Pulse Energy will secure access to all future revenue streams of the combined business from January 2001 as the energy market becomes fully contestable. This revenue is currently more than $1 billion a year.  Chief Executive Officer of United Energy, Mr. Don Bacon, said United Energy would receive net proceeds of approximately $232 million from the contribution of its retail electricity business which would be used initially to retire debt and to position the company to take advantage of future growth opportunities.  "Pulse Energy is set to be Australia's most significant and innovative energy retailer that combines the strengths of Australia's leading energy companies. With United Energy's existing customer base and extensive operating and marketing expertise, Shell's considerable retail strengths, together with Woodside's ability to provide an alternative gas supply choice, we see Pulse Energy becoming the leading energy retailer in Australia by meeting the needs of customers with smart, simple energy solutions," Mr Bacon said.  United Energy's contribution to Pulse Energy also includes e-commerce focused back office facilities, including customer call centre services and meter reading, which will be provided on contract.  The Director, Commercial, of Shell Development Australia, Mr Wim Hein Grasso, said; "The Pulse Energy brand will build on the strengths of the Shell brand and network. Pulse Energy will secure access to Australia's largest loyalty program, Fly Buys(TM), with two million additional customer accounts, and to Shell's extensive commercial and industrial relationship network.  "Pulse Energy is consistent with Shell's desire to develop an east coast gas and power business," Mr Grasso said.  "It will be a driving force behind market reform in Australia as customers become aware of the ease, simplicity and convenience that come from the choice of buying gas, electricity and other services from the one provider."  Woodside's Australian Gas Director, Mr Jeff Schneider, said Woodside's interest in Pulse Energy was part of the company's strategy to build relationships and capture markets for its south-eastern, northern and north-western Australian gas resources.  "Woodside sees eastern Australia as an important and major long-term market in which we intend to provide an alternative gas supply choice, initially through our interest in the Bass Strait Kipper field and, in the medium term, through our northern Australia gas resources off Darwin," Mr Schneider said.  "Pulse Energy builds on the Woodside-Shell Alliance, combining the upstream and downstream strength of both companies, and provides the opportunity to work with United Energy to access eastern Australian energy markets."  Pulse Energy will continue to service its Victorian customers and expand its presence in interstate electricity and gas markets as they become contestable.    
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