It is becoming increasingly obvious that San Diego-based SempraEnergy is going to make a full-court press in its nonutilitybusiness units, seeking to get one-third of its earnings from thosebusinesses collectively in less than three years, according to itssoon-to-be CEO Steve Baum, the current president and COO. To hitthe earnings goal, Sempra’s nonutility businesses need to approach$275 million in collective profits, Baum told employees recently.
Up to $70 million of the earnings are expected to come fromenergy services, an area Sempra is trying to beef up throughacquisitions, such as the pending sale of the noncommodity parts ofits northern California-based neighbor PG&E Energy Services,which earlier this spring sold its retail commodity contracts toEnron Corp. for $85 million.
“We’re going to recruit more sales people and some of thesepeople may come from an acquisition,” said Bob Dickerman, SempraEnergy Solutions president, as quoted in an employee report. TheSempra energy services subsidiary will target commercial/industrialcustomers in 11 states in four different regions (West, Gulf Coast,Upper Midwest and Northeast) with a potential of $80 million incollective revenues. Dickerman’s goal is to reach $2 billion inrevenues by 2003.
The energy services business is the centerpiece of Sempra’s newstrategy, according to the company’s senior leaders.
Baum’s message to both employees and shareholders earlier thismonth was that Sempra Energy, with a foundation of two majorutilities combining to provide service to more than six millioncustomers in the southern half of California, intends to operate”world-class delivery services businesses (Southern California Gasand San Diego Gas and Electric) and will use its basic strengthsthere “to gain leadership and profit” in five other lines ofbusiness.
“At Sempra Energy, we will drive to restructure markets,” Baumis quoted as telling employees. He speculated that “high-performingcompanies in the energy services business” should produce totalannual shareholder returns approaching 20%.
Sempra Energy’s recently unveiled strategic plan aims at thislevel of growth, something not achieved so far by most of the majorutility-based energy firms that are expanding into variousunregulated businesses.
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