Houston Industries Gives Nod to Gas-Power Convergence
The move by Houston Industries (HI) last week to reconfigure its
business to meet the demands of gas and power convergence follows
recent actions to build up its power generation division. HI formed
Houston Industries Wholesale Energy Group to combine its power
generation, gas transportation, and wholesale energy trading and
marketing capabilities of the company.
"Houston Industries is positioned to compete across the energy
chain, and capturing the value creation opportunities that exist
between our businesses is a key part of our corporate strategy.
Nowhere are those opportunities more pronounced than they are
between our power generation business and our wholesale energy
trading and marketing business," said Steve Letbetter, HI
president. "This consolidation of two previous business groups,
Houston Industries Trading and Transportation (HITTG) and Houston
Industries Power Generation (HIPG), positions us to be a leader in
this rapidly evolving 'upstream' industry.'"
The HI Wholesale Energy Group will be led by Charles Oglesby,
CEO, and Joe Bob Perkins, president and chief operating officer.
Oglesby had been president and chief operating officer of HITTG
where he was responsible for interstate pipelines, natural gas
gathering and wholesale energy trading. Perkins had served as
president and chief operating officer of HIPG where he was
responsible for all of HI's domestic power generation activities
"We have jointly been developing strategies and pursuing
opportunities with early success - this combined organization will
be in an even stronger position to compete across the upstream
energy chain where we are already one of the leading players," said
Oglesby. "It will build on the close working relationships already
demonstrated in our successful California generation and trading
operations as well as the coordinated development efforts behind
several announced greenfield projects."
Perkins ranked HI among a handful of what he considers major
players competing in the wholesale sector: Duke Energy, Enron,
PG&E, Southern Company, and Williams. "What we're saying is
we're already among that top group. What we're committed to do is
to take it to the next level. In the case of gas and electricity,
it's clearly one business for us."
Going forward, HI's efforts should be more coordinated, Oglesby
pointed out. Previously, separate parts of the company worked
together to bring deals to fruition. Now, these areas of HI will be
operating under one umbrella organization.
The new HI Wholesale Energy Group represents 17,800 MW of
generating capacity and 1,400 MW of projects under construction or
development as well as 8,200 miles of interstate gas pipeline and
4,000 miles of gathering pipeline. Wholesale trading volumes total
4.0 Bcf per day of gas and 80 million megawatt-hours of electricity
annually, making the company a top-10 marketer in both gas and
In April, HI Power Generation completed the $237 million
acquisition of four gas-fired generating plants with 2,276 MW of
capacity from Southern California Edison. In March the company
announced plans to buy SoCal Edison's Ormond Beach Generating
Station, which has two gas-fired units and 1,500 MW of capacity,
for $43 million.
Joe Fisher, Houston