Sempra Energy Makes Big Push in Energy Services
It is becoming increasingly obvious that San Diego-based Sempra
Energy is going to make a full-court press in its nonutility
business units, seeking to get one-third of its earnings from those
businesses collectively in less than three years, according to its
soon-to-be CEO Steve Baum, the current president and COO. To hit
the earnings goal, Sempra's nonutility businesses need to approach
$275 million in collective profits, Baum told employees recently.
Up to $70 million of the earnings are expected to come from
energy services, an area Sempra is trying to beef up through
acquisitions, such as the pending sale of the noncommodity parts of
its northern California-based neighbor PG&E Energy Services,
which earlier this spring sold its retail commodity contracts to
Enron Corp. for $85 million.
"We're going to recruit more sales people and some of these
people may come from an acquisition," said Bob Dickerman, Sempra
Energy Solutions president, as quoted in an employee report. The
Sempra energy services subsidiary will target commercial/industrial
customers in 11 states in four different regions (West, Gulf Coast,
Upper Midwest and Northeast) with a potential of $80 million in
collective revenues. Dickerman's goal is to reach $2 billion in
revenues by 2003.
The energy services business is the centerpiece of Sempra's new
strategy, according to the company's senior leaders.
Baum's message to both employees and shareholders earlier this
month was that Sempra Energy, with a foundation of two major
utilities combining to provide service to more than six million
customers in the southern half of California, intends to operate
"world-class delivery services businesses (Southern California Gas
and San Diego Gas and Electric) and will use its basic strengths
there "to gain leadership and profit" in five other lines of
"At Sempra Energy, we will drive to restructure markets," Baum
is quoted as telling employees. He speculated that "high-performing
companies in the energy services business" should produce total
annual shareholder returns approaching 20%.
Sempra Energy's recently unveiled strategic plan aims at this
level of growth, something not achieved so far by most of the major
utility-based energy firms that are expanding into various
Richard Nemec, Los Angeles
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