Doug Hyde doesn’t look like a revolutionary. Tall and lanky, he sports a conservative olive-green suit that matches his eyes. His chiseled face has the ruddy complexion of an outdoorsman. Out the window of his office in South Burlington, Vt., rolls a panorama of fir trees, the glittering water of Vermont’s Lake Champlain, and the blue skyline of the Adirondack Mountains.

Yet Mr. Hyde has a vision that others might view as impossible: He wants to transform the tradition-bound utilities industry into an entrepreneurial consumer-products business.

"We think consumers are going to buy electricity the way they buy soap, automobiles, and ham," said the 54-year-old Mr. Hyde, president of Green Mountain Energy Resources, or GMER, a startup that will sell electricity nationally.

While the utility industry has long been a playground of monopolies, where size matters and being lean has never been much of a concern, the situation is clearly about to change somehow. Deregulation is letting utilities move beyond their longtime state and regional boundaries, creating opportunities for innovation never before seen in an industry that numbers among the nation’s largest, generating more than $200 billion a year in revenue. At the same time, the safety net is being pulled—state utility commissions will no longer guarantee them a profit. Utilities were long known for their dependably boring stocks, whose primary function was to generate big dividends. They were called "widow and orphan" stocks because even those who couldn’t afford risks were safe investing in them. But fortunes are going to be made—and lost—on utilities over the next few years.

Like many executives in rapidly changing industries, Mr. Hyde is betting that information technology will be a key factor in separating the winners from the losers. Although he has no technical background, he has made a technology-based marketing approach the centerpiece of his strategy. He intends to sell environmentally friendly power, using agile information systems to track what his customers want and to adapt to those desires over time.

His plan aims to forge an emotional bond with customers both by providing renewable, alternative sources of energy and by awarding "EcoCredits" that encourage "green" behavior among customers.

While there is always risk in a rapidly changing industry, analysts said that Mr. Hyde has a good chance of succeeding. Market studies have found that green power should be a strong niche market. Mr. Hyde has lined up $30 million in seed capital from Sam Wyly, a high-profile investor who owns 67% of the venture. He can also draw on his relationship with Green Mountain Power, a venerable Vermont utility that has the remaining 33% stake in GMER. In addition, the Green Mountain brand name has already achieved strong name recognition in California—the big, early test of deregulation.

"GMER is a wonderful idea," said Roger Liddell, a managing director at the New York-based investment firm of Ingalls & Snyder. He said that while the "financial viability is not yet demonstrated, (GMER is) likely to be successful in California because there are enough people there who feel strongly about green energy."

Mr. Hyde believes so strongly in the idea of GMER that he gave up the far safer job of president and chief executive of Green Mountain Power to become president of the new venture. Like all employees, he has options in the new company.

Mr. Hyde is not a traditional sort of entrepreneur. He isn’t an engineer, a financier, or a marketer. He is a lawyer, one with a strong dose of New England frugality. Vermont is a fitting setting for him. A 1968 state law banned billboards, and Burlington’s tallest "skyscraper" is less than 10 stories. Strong land-use statutes prevent suburban sprawl. With some 565,000 residents, Vermont retains a rustic character. Its biggest city, Burlington, has just 40,000 people.

What Mr. Hyde does share with many entrepreneurs is deep idealism. After graduating from Boston University Law School in 1968, he went to work as a storefront lawyer serving the poor in one of the city’s worst ghettos. "I was passionately opposed to the Vietnam War," said Mr. Hyde, who wore a beard at the time. (His work won him a deferral from military duty.) "Virtually all my clients were minorities," Mr. Hyde, a vegetarian, recalled over a lunch that consists of three bagels—no butter, no cream cheese. "I learned a lot about social justice, racism, race relations and the politics of poverty. I was undoubtedly a radical as it pertained to the legal system at the time."

After five years, he became an Assistant Attorney General in Vermont’s consumer fraud division, then worked briefly in private practice at a small Burlington law firm. Green Mountain Power approached him in 1977. "I couldn’t imagine working for a public utility corporation," Mr. Hyde said. "I had been too busy suing public utility companies up until then."

But he joined Green Mountain Power because he wasn’t enjoying private practice and wanted to try corporate law. He found the work fascinating. "The legal work was deeply absorbing and intellectually stimulating. It really caught my attention," Mr. Hyde said. In 1981, he became vice president and general counsel. In 1986, he was promoted to executive vice president. In 1993, he became president and chief executive.

His idealism and Vermont’s green tradition made the GMER idea a natural once utility deregulation began to take hold. But that doesn’t mean it was easy to put the company together.

First came the painstaking work to decide whether there was even a market for green power at a price that could sustain a business. In addition to considerable private research, Mr. Hyde took comfort in a recent study—financed by 40 major public utilities—that surveyed 25,000 customers in Massachusetts, New Hampshire, New York, Ohio, and Illinois. The study found that a surprising 20% of customers are voluntarily paying more for green electricity in half a dozen pilot projects.

Lining up financing turned out to be much more complicated. Mr. Hyde decided that a separate company was the way to approach the new opportunity, largely to keep still-regulated Green Mountain Power distinct from the new, unregulated venture. But he and Green Mountain Power had no particular experience in putting together entrepreneurial ventures, so they had to feel their way through various possible sources of money and how to value the company’s contributions to the venture. Even after they located Mr. Wyly, the process took many weeks. A Dallas entrepreneur, Mr. Wyly has founded and helped build several publicly traded companies, such as Sterling Commerce, Sterling Software, and Michaels Stores, a retail chain that sells arts, crafts, frames and floral items, with more than 450 stores nationwide. He also runs Maverick Capital, a private hedge fund—and he has a history of hard negotiating. The deal took several incarnations before the final agreement was reached.

To set the right tone for the new business, Mr. Hyde changed the salary structure to more of an incentive-based pay system to motivate employees to perform. He also moved GMER down the road from Green Mountain Power to an inexpensive building, where GMER is cutting costs by sharing some of its space with a ski boot company.

In addition, Mr. Hyde went outside the utility industry to hire some important expertise. Among the new hires was Kevin Hartley, vice president of marketing, who played a major role in shaping the idea for the new venture. Before joining GMER, Mr. Hartley, 37 years old, had helped transform a fiberglass company from a producer of a commodity into a branded product with broad consumer following.

To simplify some aspects of the business and get it up and running as quickly as possible, GMER was set up as a largely "virtual" company, Mr. Hyde said. "We’re trying to outsource infrastructure that we’d have to build internally, such as marketing and creative work. We didn’t want to own anything; instead, we wanted to employ as few people as we could." The company currently has just 40 employees. Mr. Hyde expects to grow to only 100, even though he intends to have employees or representatives dotted all over the U.S. as GMER builds a national presence.

The outsourcing strategy extends to the design of the firm’s information technology system, which will allow GMER to communicate with customers in real time, creating large amounts of data about current and potential customers for marketing purposes. "We will be building an entirely new I/T infrastructure for the new company, since almost nothing at Green Mountain Power is suitable for our use," Mr. Hyde said.

Among other functions, the new technology will be used to manage payroll, buy energy, support telemarketing, and create Web pages. I/T will also enable GMER to revamp its billing and revenue systems. For a product like electricity—which is used constantly in varying amounts, often at varying rates—the billing is complicated, and the company will rely on information technology to ensure that the whole process runs smoothly. Good I/T systems will also be needed to give customers the flexibility to choose—and change their minds about—what type of power they buy, whether that’s wind power, solar, geothermal, or hydroelectric. (GMER will continue to use the distribution service from the local utility, which owns the wires over which the electricity reaches customers.)

The company also wants to encourage positive behavior—and must track what customers do. If one quits smoking, starts a garden, or plants a sapling in his yard, he will be rewarded with "EcoCredits" that can be redeemed for various environmentally friendly products.

"I/T is at the heart of all these capabilities," Mr. Hyde said. "Our target customers are highly likely to be computer-literate, and in short order we’ll be conducting business with them on an electronic basis" over the Internet.

Mr. Hartley, the vice president of marketing, stressed how essential information technology is to the marketing efforts. "Knowledge is market power, not bricks-and-mortar assets," he said. "Pretty soon, consumers will buy whatever they want, wherever they want it, whenever they want it."

In his view, marketing is being forced out of its role of "broadcasting" its message to consumers. "We want to create an electronic dialogue with our customers," he explained. "We want to bring you into our product development process." Ultimately, as the deregulation of the utilities industry takes place and the business landscape is redrawn by entrepreneurial activity, consumers will take on an activist environmental role. Customers will—through their energy choices—shape environmental policy by deciding what kinds of power plants they want to support.

The immediate challenge for GMER is its January 1998 debut in California, which will be the first major battleground for utility competitors in the U.S. "California is such a large state and is often the leader in environmental aspects of industry and legislation," said Julie Blunden, GMER’s regional director in San Francisco. "What goes on here will affect the entire country."

California has 11 million households—all potential utility customers—representing 11% of the nation’s residential utility market. A wide variety of competitors have thrown their hats in the ring, seeking to capture this market. But most are aiming at large commercial and industrial clients, whereas GMER has its eye on the residential market.

"We’re about truly retailing at the consumer level," she explained. "And we’re probably one of just two or three companies dedicated to the residential market."

They will also court small business. They’re not going after large commercial and residential clients because that it would involve a national marketing strategy on a scale too vast for Green Mountain to contemplate.

GMER expects California to be especially friendly to its ideas because of its history of environmental concern. "Electric utilities are the biggest air polluters in the U.S.," Mr. Hartley said. "An environmentally conscious brand position is not just brand veneer or topspin in this business. This is right down the heart of the biggest air polluter in the country. When you stir all that together, you get an intoxicating business idea."

Mr. Wyly, the Dallas investor, said: "We’re combining three elements that can’t fail: the Vermont environmental ethic, Texas capital, and old-fashioned American entrepreneurs’ frontier spirit. We’re taking that combination into a brand new market that’s bigger than the telephone industry."

Notwithstanding its allure, the GMER undertaking is fraught with risk. If, for example, the California test case flops, it will set back utility deregulation at both the state and federal levels. GMER, as a niche player, will be small enough that it will be more vulnerable than the big players, such as Enron. Perhaps there aren’t that many people out there willing to pay more for "green" energy. Maybe, when all is said and done, price is going to be the decisive factor when people choose a utility.

In addition, there is no clear consensus as to what form utility deregulation should take—and some proposals that are being advanced could alter GMER’s plans. Conservatives—such as The Heritage Foundation, a Washington, DC-based think tank—advocate a pure, free-market approach, eliminating all barriers to entry. The Left has its own views. Various consumer and environmental groups—such as Ralph Nader’s Public Citizen—are concerned that big electric utilities will get too sweet a deal in deregulation. They worry that proposals advanced so far call for consumers to end up paying for past investments in uneconomical power plants, such as nuclear facilities, which produce power at a higher cost than the market will bear. Activists—such as the Massachusetts Public Interest Research Group—believe that at least some of the costs for old, uneconomic plants should be shouldered by utility investors.

Whatever proposal wins, some commentators worry that movement will be too slow for companies that are trying to take advantage of deregulation. A respected industry commentator, Larry Ruff, writing in Electricity Online, warned, "It is hard to be very optimistic about the near-term outlook here." He cautioned that America’s attempts to reform its utilities industry will be hampered by what he considers to be the nation’s excessively complicated legal, administrative and political process. "There is good chance that, within the next year, the U.S. reform process will be viewed as a policy disaster," he said.

Asked to comment, Mr. Hyde said simply, "I have spent most of my time and energy trying to figure out what needed to change—and how to find opportunity in change." He is no Pollyanna, but a clear-eyed realist. He likened the business climate in the utilities industry to "constant whitewater"—an atmosphere of turbulence and uncertainty. "Whitewater exists because the water is moving,’ he said. "When you’re in it, you’re not only coping with turbulence, but you’re going somewhere. Where you wind up is not always predictable."

"In fact," he said with a hint of pleasure, "it can be really quite surprising."