Utilipro Inc., an 80% AGL Resources-owned customer-caresolutions provider, announced yesterday it is cutting staff andreorganizing because energy deregulation is taking hold too slowly.
As part of the changes, Utilipro announced that James Hopkins,formerly director of information technology at Utilipro, is nowpresident, having day-to-day operating responsibilities for thecompany. Neil Stewart, formerly director of information technologyoperations at Utilipro, is now the chief information officer. BrianGillespie, who had been president and CEO of the company, is nowits full-time CEO.
The management at Utilipro also decided to reduce the workforceby 10%. It currently employs 280 people in its headquarters inAtlanta, GA..
“The transition to a deregulated energy market is occurring at aslower pace than anyone anticipated,” said Gillespie. “With therecent exit of key players, such as Sierra Pacific Energy Corp. [inNevada] and PSEG Energy Technologies [in New Jersey], from thederegulated energy market it is clear that the complexion of thecompetitive landscape is changing.”
Utilipro, which serves electric and gas suppliers in California,Georgia, New Jersey, Nevada, and Pennsylvania, has undergone majorcriticism over its operations in Georgia. Last year, Peachtree NaturalGas, one of the largest marketers in the state at the time, filed forbankruptcy in federal court and said billing problems related toUtilipro were a big part of the problem (see Daily GPI, Oct. 29). Peachtree eventually was forcedto give up its customers and halt operations in the state.
While he acknowledged the problems with Peachtree, Gillespiesaid the situation in Georgia was not a contributing factor to thereorganization. “In Georgia, there have been some problems becausewhen our customers signed up, they agreed to be at certain volumesat certain points of time. Unfortunately for us, the state decidedto speed up the process halfway through, and we fell behind as aresult. Certainly Peachtree was a good company, but it had otherissues besides our billing that caused their problems.
“The problem of energy deregulation moving too fast has beenisolated to Georgia,” he continued. “Overall, it’s not happening atthe pace most people said it would two years ago. In our business,we need to be prepared 12 to 18 months ahead of the actualderegulation process. Yet because it has moved so slowly overall,we’ve decided to scale back somewhat.”
This marks the latest in a string of companies that haverecently scaled back their efforts in deregulating markets. Earlierthis year both DTE Energy and Cinergy entirely pulled out of theretail marketing arena, saying the markets are not developed enoughto turn serious profits.
In Nevada, Sierra Pacific Power and Nevada Power have both filedlawsuits against the state commission to halt the application ofthe current electric deregulation legislation (see Daily GPI, March29). The utilities claim the system, as it stands now, would beunfair to its customers and shareholders if implemented.
It’s this kind of setback that has caused Utilipro to pull back.”If you look at the Nevada situation,” Gillespie said, “there was acase where the deregulation process was supposed to move swiftly,like in Georgia. Now, people are saying ‘no way,’ and want thewhole thing changed. This type of setback has shown us thatderegulation will move at a much slower pace than we originallythought.”
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