| Nothing But the Best – KeySpan’s acquisition of Eastern Enterprises was motivated by more than just a very attractive growth market for natural gas. Eastern’s gas companies – Boston Gas, Colonial Gas, Essex Gas and soon EnergyNorth – are characterized by high-quality, experienced work forces who understand how to operate in the newly competitive energy environment. The integration of KeySpan and Eastern will create an unbeatable customer-focused team. |
| Business to Business – Staying on top in today’s business world means delivering the products and services your customers need – at the right time, for the right price. KeySpan’s regulated and unregulated companies offer a full menu of business solutions to commercial customers throughout the tri-state area. New products and services are continually explored to meet the changing needs of this dynamic customer segment. |
The Name of the Game –
One of the most critical factors in the success of any business is getting your name into the public eye. In 1999, KeySpan placed a great emphasis on making sure that customers in the communities we serve know who we are. One effective strategy? Get your name emblazoned over left field at Shea Stadium! KeySpan’s billboard was viewed by millions both in person and on national television. |
| Now You’re Cooking With Gas! – Natural gas is a plentiful fuel that adds value to homes because it’s clean, dependable, and very versatile. A growing number of homeowners are expanding their use of natural gas from traditional cooking and heating to clothes drying, heating their pools – even barbecueing! Natural gas brings comfort and convenience home. |
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North by Northeast
In November, we announced our agreement to acquire Eastern Enterprises, the Weston, Massachusetts-based parent company of Boston Gas, Colonial Gas, Essex Gas and several unregulated subsidiary companies. Eastern is currently in the process of acquiring EnergyNorth, a New Hampshire-based gas company, which is included in the KeySpan-Eastern agreement. The total cost of the acquisition is $2.5 billion.
The deal will make KeySpan the largest gas distribution company in the Northeast, with 2.4 million gas customers. Combined with the electric customers KeySpan serves under contract to the Long Island Power Authority, the acquisition gives us access to more than 3 million customers in three states.
The combination provides us with an excellent opportunity to increase growth in our target market. On the utility side, Eastern Enterprises is the largest natural gas distribution company in New England, however the region still has a relatively low penetration of gas heat customers. With only 40 percent of households using natural gas for space heating, the acquisition presents opportunities for gas sales expansion similar to the Long Island territory. The combined company will have the opportunity to leverage our longstanding marketing expertise and reputation for excellent customer service to grow the regulated side of the business. But even more importantly, the acquisition gives us a platform for marketing the full array of services that both KeySpan and Eastern have been developing in their non-regulated subsidiaries.
Establishing the Base
This larger customer base will obviously provide a greater opportunity for product and service sales, but will also give us the ability to extend our management and systems capabilities to a broader market, and provide economies of scale needed for additional investments in key systems and technologies.
We intend to build on this significantly larger customer base through three distinct customer-focused strategies. We will identify additional products and services that the customers want and build on our excellent relationship to sell to these customers. We will target consumer energy-related service companies with both customer and product portfolios. And finally, we are looking at acquiring retail energy customers – essentially buying customers but no physical assets, such as a book of customers from a niche marketer or the marketing subsidiary of another utility.
Focus on the Customer
Acquisition of customers, although critical to our success, is only the first step. In a deregulated market, retention of those customers is key. To maintain our customer base, we will need to clearly understand market dynamics, anticipate the needs and desires of our customer base, and surpass our competitors in quality and delivery.
To that end, we must grow the unregulated side of the business as we build customer base, so that we can meet the increasing demands of both residential and commercial customers in the deregulated marketplace. Again, our strategy for growth involves acquisitions of energy-services companies throughout the Northeast, as well as select partnerships and alliances to develop new energy technologies.
Over the last year, KeySpan’s unregulated subsidiary, KeySpan Services, has doubled in size through such strategic acquisitions. In November, the company acquired Delta Mechanical of New England, Inc., the largest heating, ventilating, and air-conditioning (HVAC) contractor in the state of Rhode Island. With revenues of approximately $30 million, Delta designs, builds and installs HVAC systems for a largely commercial customer base in the New England region and its acquisition increases KeySpan’s reach into this thriving market.
In February 2000, KeySpan Services further expanded its reach and its array of services, acquiring three major engineering and construction companies in the New York metropolitan area. The three acquisitions represent revenues of $170 million and bring to KeySpan blue-chip clients that include leading hospitals, real-estate developers, manufacturers and pharmaceutical companies.
Our expertise in developing and maintaining customer relationships will give us the edge we need to market the highly valued products and services these acquisitions bring to all our customer groups. KeySpan has a strong tradition of exceptional customer service – we will not allow that to diminish as we grow.
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