When the concept of a common currency was first introduced, I was more than skeptical. But the vision of a European currency refused to die and now we have the euro. The euro is a visible reminder that the European community has forged a consensus to create a structure where the best practices will prevail, enabling the economy to grow as businesses expand and become more profitable.

We are likewise witnessing a remarkable transformation as European utilities become more competitive. I've witnessed major shifts in utility business practices and culture while visiting Germany, France, Slovakia and England. These revamped business practices are now being shared among countries as European utilities emerge to drive Europe toward a regional utility market. Recently, Deutsche Telekom announced its desire to merge with Telecom Italia. Over in the electric sector, Electricite de France purchased London Electricity. These events are likely the first in a series of cross-European consolidations as companies seek to expand markets and achieve economy of scale. Of course France is still France, England is still England and Italy is still Italy. Each country has maintained the right to proceed at a pace that makes sense for that country. Still, I marvel at the rate Europe is moving forward.

Utilities all across Europe are looking for deals. RWE in Germany and Endesa in Spain are actively seeking purchase, merger or stake-holding deals. Nordic utilities, capitalizing on earlier liberalization efforts, are seeking business opportunities in Germany, Poland, Hungary and the Czech Republic. Certainly more deals are in the works that have yet to come to light.

It's difficult to piece together a coherent view of the future of the European utility industry based on individual bits and pieces of news and events that cross my desk. Fortunately, I recently received a summary of European activities from Andersen Consulting. Business analysts Gill Rider, head of the firm's European utilities consulting practice, and James Crowley reviewed recent European activities and predicted trends that will shape the energy industry. Rider and Crowley predict we will see three segments emerge: energy, asset and retail. According to these analysts, each segment will require very different success factors and capabilities, but efficiency and profitability will increase in importance in all three segments.

Early movers are shaping the industry's future. Rider and Crowley highlight Enron's move to sign up major industrial customers to energy supply deals as accelerating the opening of European markets. They expect energy trading to escalate rapidly, predicting that seven or more electricity trading exchanges will soon be operating within the European Union.

We are already seeing margins squeezed in Europe in all industry segments. In Finland, large industrials have seen their electric bills reduced by 10% to 20% since competition was introduced in 1995. That doesn't mean that prices will stay low. As supply and demand replace regulation, Rider and Crowley predict that market forces will drive prices up as well as down-similar to fluctuations we now see in gasoline prices worldwide.

Expect also that utilities will focus on delivering energy, not just electricity. Perhaps the biggest trend noted by Rider and Crowley is the investment in upgrading cross-country gas transmission infrastructure, enabling Europe to import more gas from countries such as Russia and Algeria. Imported natural gas will make up 70% of European gas supplies within 10 to 15 years, compared to 30% imported today. Because gas pipelines are easier to site and install than electric transmission lines, Rider and Crowley believe that locally placed gas-fired generation will enable utilities to reduce or eliminate bottlenecks on electricity transmission networks. Unipede predicts that 55% of power plants commissioned in the European Union between 1996 and 2010 will be gas fired. Expect to see co-generation plants make up 18% of new generation by the year 2010.

We will continue to see new and existing companies offer innovative solutions to meet Europe's energy needs. We will also see more utilities cross borders in an attempt to hold down costs and grow revenues.