Be Willing to Change, Lead, Say Utility Execs
Need a reason to embrace the future of the power industry? How
about 10 reasons? Several U.S. utility executives last week offered
their upbeat take on the power generation and natural gas outlook
for the next five years, with El Paso Energy, Reliant Energy,
Dynegy Inc. and Williams Energy Services giving a birds-eye view of
what's ahead during a forum at PowerMart 2000 in Houston.
Though the problems facing the power business today will be
similar in the years to come, companies that succeed will be the
ones willing to not just change, but willing to take the lead to
ensure success for themselves and their shareholders.
Companies able to deal with the myriad changes, including a
burgeoning e-commerce economy, a persistent labor shortage and a
continuing need to update technological skills present more
opportunities than problems, said Gar Seifullin, managing director
of El Paso Energy Power Finance.
"There's a lot more entrepreneurial vigor, and over time, our
industry has the ability to change," Seifullin said. "We have to
take the opportunities we find to market. Entire new businesses are
developing, but the impact of true competition is yet to be felt."
Griff Jones, vice president of Dynegy's power trading group for
the Midwest and southeastern part of the United States, said that
both the power and gas markets have the potential for tremendous
growth in the next few years. However, even more than those
markets, the communications arena appears to hold even more
"Power, gas and communications markets work together very well,"
Jones said, referring to the growing telecommunications and
bandwidth industries. "Energy and technology convergence is a neat
thing. Communications is just a transplant from energy." Jones said
that e-business is the "opportunity for us to transfer and grow our
Three years ago, Reliant Energy took its first steps into the
wholesale market, said Joe Bob Perkins, COO of the wholesale group.
"We started at zero," said Perkins. Before entering the wholesale
marketplace, Reliant decided to develop strong commercial
portfolios in attractive regions, and found "multiple" ways to win.
"We're not a one-trick pony," he said.
By developing a regional trading portfolio, Reliant was able to
pinpoint favorable supply and demand dynamics, attractive market
rules and competitive positioning in the regions it targeted. Now,
Reliant, which had already become a leading utility, owns about
30,000 MW throughout the country. Because this strategy has worked
so well, Perkins said Reliant would continue to focus on regional
"The leaders will get larger, but only a handful will be able to
do this," said Perkins. "All told, I see our commercial advantage
in actively participating in the market with both an asset book and
a trading book. You have to meet the total needs of the customer."
The future of energy, at least from Williams' point of view, is
summed up in the "seven Cs" said Dean Jones, vice president of
strategic business relations. Competition, customer choice,
convergence, consolidations and constant change "churn up the
perfect storm," he said. By looking at other industries that have
gone through some of the same things facing the power market today,
Jones said that utilities companies could learn a few lessons.
"Deregulation is going to take a little bit of time to sort out,
as far as competition. And customers want choice. We are close to
having the technology in place to know what they want, and this is
a critical piece of information to be successful in the future,"
He also warned that the future "holds more consolidations. It's
not over." With "constant change, which is inevitable, this will
create opportunities." But Jones warned that because power and gas
are more dependent on each other than ever before, "we need to be
cognizant of the changes to make sure the infrastructure is in
place to guarantee success."
Carolyn Davis, Houston