The American Gas Association’s “shrewd” new President and CEODavid N. Parker has discovered a period of calm, but continuedstreamlining is the best thing right now to keep AGA in goodstanding with its members. In an interview with NGI last week,Parker said he has made a commitment to the AGA board to furtherreduce expenses and hold down membership dues.

It’s a safe move, noted one observer. “Parker, who I think is atleast shrewd, is doing the right thing here. It looks like he’sgoing to be a tough manager. But in some ways it doesn’t take arocket scientist to understand that one has to keep dues flat ifyou’re going to keep these members happy. It actually wouldn’tsurprise me to see further downsizing of AGA.”

Parker clearly doesn’t see expensive national advertising assomething AGA will want to bring back “in the foreseeable future”but he also doesn’t expect cost cutting to impact AGA’s currentstaff. “I can’t see that [further AGA staff reductions are] in thecards. You obviously are always going to have some changes. I haveno track record of doing big reorganizations in my previous life.”

He does, however, want improved performance, particularly inAGA’s lobbying. AGA intends to be involved in “a lot more directcontact and education of key folks at FERC and NARUC and we’ll bemuch more aggressive on Capitol Hill in advocating our interests.”Parker said the issues AGA will be going after are pretty clear:One-Call pipeline safety; PUHCA repeal; and tracking anything thatrelates to the development of a funding program, appropriations ortax crediting measures related to emissions programs that wouldenhance the use of natural gas. It also will be tracking electricderegulation.

Under Parker, AGA also will launch a variety of new initiativesincluding implementing a new gas industry statistical system toprovide members with industry financial, operational and marketingdata. He has called for more video conferencing with members sotravel costs can be reduced. An antitrust policy has been installedthat AGA staff and all committee chairs must adhere to.

The conflict that tore AGA apart over the past few years seemsto be over. But Parker enters at a time when LDC unbundling isexpected to accelerate. Maintaining membership levels is likely tobecome even more difficult.

“[His] job is to stop the hemorrhaging and create an efficient,restructured, streamlined Washington staff that provides essentialservices and products to the gas utility industry that serves amuch narrower targeted function,” said one source who asked toremain anonymous. “He can be that transitional guy.”

Parker entered the AGA following perhaps its most tumultuousperiod. Since the start of the decade, the association has beenunder tremendous pressure to downsize and cut costs because ofindustry restructuring, greater competition among its members, andthe need to become more efficient. In 1996, following a report byconsulting firm Towers Perrin, AGA cut 42 staff positions, reducedits annual budget by 30% to less than $30 million, cut gas utilitymember dues by 25% and dropped pipeline member dues by 83% afterthe pipelines threatened to exit the association. Since thebeginning of the 1990s, AGA has reduced its staff by about 55%, or133 positions, to the current level of 110 full-time slots.

The changes culminated in the forced resignation of former AGAPresident Mike Baly last year. Baly apparently came into conflictwith some board members who felt AGA was wasting too much timetrying to become an “umbrella” type organization that representedthe entire industry. There also were some board members who hatedthe national advertising program, which Baly felt was an importantcomponent of what AGA had to offer.

Without a gas industry background, Parker clearly has his workcut out for him. He believes his significant association experienceat the Edison Electric Institute and the Aluminum Association andhis 17 years of experience on Capitol Hill will help him make theright decisions. “I’ve been in the association business for 20years and I see what’s happening in other associations. I think ifyou’re a good association leader, you try to stay out in front ofyour members, and one of the ways of doing that is being very costconscious and not spending an extra nickel if not needed.”

During the five months since he was hired, Parker has traveledthe country interviewing dozens of members. He directed a survey of181 member representatives to assess whether AGA is fulfilling itsnew roll as an advocate for gas utilities efficiently or whetherfurther downsizing and cost-cutting are required.

The theme of Parker’s 1998 Management Plan is “focus. My senseis if we focus our energies properly we can keep our costs down.We’re doing exactly what our members are doing: we’re reducingcosts but we’re becoming much more effective.

“[O]nce we decide what our core services should be and there’sagreement on that and we set aside a percentage of our budget forcore costs this year, my hope is to have no dues increase throughthe year 2000, a three-year commitment,” said Parker.

“Every program we have is either going to benefit the naturalgas utility or we’re going to unload it. We’ll be making somedecisions on some programs in the next couple weeks,” he added.

PG&ampE certainly appreciates the streamlining work AGA hasdone. The California investor-owned, electric and gas utilitydumped the Edison Electric Institute in January because of the highcost of membership but will stick with AGA this year.

“With restructuring in California, we are pretty much just adistribution company and so the $1 million in dues that EEI wasasking for was just a lot more than we wanted to pay,” said ShawnCooper, a PG&ampE spokesman. “We asked them to look at unbundlingtheir services for us and they said they might do that. For thetime being we decided that we want to stay in just AGA, partlybecause AGA’s dues are only half as much, [but also] because AGAoffers resources that our gas side has requested.

“We appreciate the fact that AGA is listening to its members andknows what their needs are. The trade association has to adapt toits members and AGA does a good job of that. We are in such achanging industry I think it’s fair to say there’s going to have tobe continual changes going on at the trade associations and withenergy companies themselves. We now are a competitive business.”

And AGA appears to be mimicking the competitive mindset itsmembers have been forced to take on. With dues flat, AGA will belooking at other means of income. Any AGA programs that survive thecut will be under greater pressure to produce revenues, accordingto an AGA spokeswoman. The association already started charging forits popular gas storage survey. It now plans to concentrate onboosting the value of its website, magazine and other products.

But the push for greater efficiency and cost-cutting hascontinued the feeling of uneasiness among AGA’s staff. “Remember,AGA has cut well over 100 full-time positions. I see two or threemore years of fine-tuning and focusing the roll of AGA,” theaforementioned observer said. “I don’t see any radical cuts orchanges. I think that you could see over a three-year period,another 10 or 15 full-time staff slot reductions through attritionand refocusing.. But I see AGA moving toward a period ofstabilization.” Rocco Canonica

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