This paper discusses how one (anonymous) utility company is developing an Energy Service Company (ESCO) to prepare for the move to a competitive environment. ESCO’s specialize in the design and implementation of energy conservation measures, such as lighting retrofit projects, updating heating, ventilating and air conditioning systems, and cogeneration projects. As the result of a recent federal mandate to update aging systems, military bases have become a primary client of ESCOs. Other clients include state and local governments, universities, and hospitals.