Energy industry companies set to adopt e-signatures

Giving digital signatures one of their biggest endorsements to date, some energy companies plan to convert to new digital certificate technology with built-in electronic signature specifications to process their online power trades.

New York-based Identrus LLC announced the certificate technology last week. The certificates were developed by Digital Signature Trust LLC, a Salt Lake City-based vendor that was acquired by Identrus early this month.

Alan Thornton, a staff engineer at Entergy Corp., said the New Orleans-based company will begin its migration to the Identrus certificates this week. Entergy will require all trading partners that want to use its transmission lines to conform to the new standards by the end of June, he added.

Ultimately Easier to Use

“While it will require some change, we think [the Identrus technology] will ultimately be easier to use and provide better security,” Thornton said.

Currently, authentication software must be loaded onto individual workstations, Thornton said. The new technology provides Web browser links to Identrus’ public-key infrastructure systems.

Other users that are preparing to implement the certificates include Columbus, Ohio-based American Electric Power Co. and UBS Warburg Energy, which earlier this year acquired Enron Corp.’s online energy trading business. UBS Warburg Energy and Enron are both based in Houston.

Alan Davidson, director of energy services at Digital Signature, said the certificates require the use of digital signatures that conform to proposed standards recently submitted to the World Wide Web Consortium (W3C) and the Internet Engineering Task Force (IETF).

The certificates will be assigned to employees of energy trading companies for US$175 each and will be valid for one year, Davidson said. When trades are made, the trading systems will check an Identrus database to verify that the parties are certified.

Identrus said the new certificates also comply with draft authentication procedures that were developed by a working group within the North American Energy and Reliability Council, a Princeton, N.J.-based organization that sets standard trading practices for the energy industry.

Tom Smedinghoff, a partner at Baker & McKenzie, a law firm in Chicago, said government regulations and vertical industry standards are ultimately what will drive digital signature adoption. But simplicity will be a key incentive to potential users, he added.

“I’ve been involved with limited digital signatures initiatives in the pharmaceutical and financial industries, and the technology complexity and the legal complexity is sometimes formidable,” he said.

The federal government approved the use of digital signatures in business transactions two years ago. But the technology needed to support them wasn’t in place, said Joseph Reagle, co-chairman of the joint W3C/IETF working group that published its draft XML-based standards in February.

“We had to figure how to assign parts of XML documents while making sure we didn’t compromise the data integrity,” he said. “That took a significant amount of work.”