The move by Houston Industries (HI) last week to reconfigure itsbusiness to meet the demands of gas and power convergence followsrecent actions to build up its power generation division. HI formedHouston Industries Wholesale Energy Group to combine its powergeneration, gas transportation, and wholesale energy trading andmarketing capabilities of the company.

“Houston Industries is positioned to compete across the energychain, and capturing the value creation opportunities that existbetween our businesses is a key part of our corporate strategy.Nowhere are those opportunities more pronounced than they arebetween our power generation business and our wholesale energytrading and marketing business,” said Steve Letbetter, HIpresident. “This consolidation of two previous business groups,Houston Industries Trading and Transportation (HITTG) and HoustonIndustries Power Generation (HIPG), positions us to be a leader inthis 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 HITTGwhere he was responsible for interstate pipelines, natural gasgathering and wholesale energy trading. Perkins had served aspresident and chief operating officer of HIPG where he wasresponsible for all of HI’s domestic power generation activitiesand assets.

“We have jointly been developing strategies and pursuingopportunities with early success – this combined organization willbe in an even stronger position to compete across the upstreamenergy chain where we are already one of the leading players,” saidOglesby. “It will build on the close working relationships alreadydemonstrated in our successful California generation and tradingoperations as well as the coordinated development efforts behindseveral announced greenfield projects.”

Perkins ranked HI among a handful of what he considers majorplayers competing in the wholesale sector: Duke Energy, Enron,PG&ampE, Southern Company, and Williams. “What we’re saying iswe’re already among that top group. What we’re committed to do isto 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, Oglesbypointed out. Previously, separate parts of the company workedtogether to bring deals to fruition. Now, these areas of HI will beoperating under one umbrella organization.

The new HI Wholesale Energy Group represents 17,800 MW ofgenerating capacity and 1,400 MW of projects under construction ordevelopment as well as 8,200 miles of interstate gas pipeline and4,000 miles of gathering pipeline. Wholesale trading volumes total4.0 Bcf per day of gas and 80 million megawatt-hours of electricityannually, making the company a top-10 marketer in both gas andpower.

In April, HI Power Generation completed the $237 millionacquisition of four gas-fired generating plants with 2,276 MW ofcapacity from Southern California Edison. In March the companyannounced plans to buy SoCal Edison’s Ormond Beach GeneratingStation, which has two gas-fired units and 1,500 MW of capacity,for $43 million.

Joe Fisher, Houston

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