Another chief executive of a major merchant energy company has called it quits. Following its successful exchange offer for all the remaining shares of NRG Energy, parent company Xcel Energy announced that David H. Peterson, chairman, president and CEO of NRG, will retire. Leonard A. Bluhm, executive vice president and CFO, also resigned.

Wayne H. Brunetti, chairman, president and CEO of Xcel Energy, assumed the interim leadership position at NRG, acting as chairman and CEO effective last Monday. Richard C. Kelly, president of Xcel Energy Enterprises, will be acting president and COO of NRG. He will be responsible for the full integration of NRG into Xcel Energy, and will report to Brunetti.

Edward J. (Jim) McIntyre, vice president and CFO of Xcel Energy, will assume responsibility for all financial aspects of NRG, along with Xcel Energy. And Paul J. Bonavia, Xcel Energy’s president of energy markets, will have responsibility for integrating the NRG trading and marketing activities into Xcel Energy. In addition, David M. Wilks, Xcel Energy’s president of energy supply, will assume responsibility for all NRG generating plants, and Craig A. Mataczynski, senior vice president of NRG Energy, and president and CEO of NRG North America, will retain his current responsibilities for growth and development of NRG North America. He will report to Kelly to assist with the full integration of NRG into Xcel Energy.

Xcel said the changes, which were made after Xcel purchased 43 million shares of NRG common stock, were a reaction to the challenging environment in which energy merchants now operate. Although the company has denied participating in any of the manipulative trading practices now being investigated, including those described in recent Enron Corp. memos and the round-trip transactions detailed by Reliant Resources Inc., CMS Energy Corp., Dynegy Inc. and others, its stock has plummeted under significant selling pressure as a result of stricter credit and financial requirements, waves of negative news about the trading and generation business and a weak commodity market and supply glut.

The overhaul of NRG’s executive team and management follows other major shakeups at Dynegy, CMS Energy and Reliant. Dynegy CEO Chuck Watson retired late last month and ChevronTexaco Vice Chairman Glenn F. Tilton moved into the executive position (see NGI, June 3) after Dynegy issued a statement noting it had received a subpoena from the U.S. Attorney’s Office in Houston requesting documents relating to the company’s transactions, including its buy and sell trades with CMS Energy and its long-term natural gas supply transaction referred to as “Project Alpha.”

“Round-trip” or “wash” deals also forced the resignation of several high ranking executives at other energy marketers, including CMS Energy’s Chairman and CEO William McCormick (see NGI, May 20), CMS’s Tamela Pallas, the CEO of CMS’s marketing unit, and two executives and two traders at Reliant Resources.

Despite the executive shakeup at NRG, Xcel’s Richard C. Kelly said the management team has done “an outstanding job growing and developing the company into one of the leading independent power producers in the world.

“Today, however, we’re operating in a significantly changed business environment.” Kelly said the new focus for NRG will be on managed growth, divesting significant assets and concentrating on management of unregulated domestic projects.

The company already has scaled back its generation plans because of credit concerns and the weak power market. In December, the company disclosed that it signed asset purchase and sale agreement for $1.5 billion with subsidiaries of FirstEnergy to acquire a 2,535 MW portfolio of generating assets (see Power Market Today, Dec. 3). Moody’s Investor Services subsequently placed NRG’s corporate securities under review for possible downgrade.

In April, NRG backed out of a transaction with Conectiv, in which NRG was set to buy 794 MW of generation (see Power Market Today, April 2). It also is seeking to place several generation units in New England on backup reserve because of the weak market.

The company has about 32,000 MW of generation operating, under construction or planned in the United States and internationally, including 25,000 MW that it currently operates. Parent company Xcel has operations in 12 western and midwestern states serving 3.2 million regulated power customers and 1.7 million utility gas customers.

On May 31, NRG shareholders had tendered a total of 43 million shares of NRG common stock in the Xcel repurchase. Together with the NRG stock that Xcel Energy previously owned, Xcel now owns 96% of NRG.

“We believe our plan to integrate NRG as part of Xcel Energy is the best alternative to deliver shareholder value,” said Brunetti. He said the company expects to “enhance profitability by integrating our marketing and trading groups, the management of our power plants and our corporate headquarters functions.”

Under the terms of the exchange offer, NRG shareholders receive 0.50 of a share of Xcel Energy common stock in a tax-free exchange for each share of NRG stock tendered. Following the merger, NRG common stock will no longer be publicly traded. Based on the May 31 closing price of Xcel shares, the exchange ratio represents a value of $10.75 per NRG share.

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