California Electric

[tw]

The Economist (20 Jan 2001) provides a very good analysis of CA's power problems. In essense the 'powers that be' talked free market and created none. For example, when everyone else has access to derivatives, then you are at the market's mercy if you can only purchase on the spot market. That is what the politicans did to CA's electric industry. They called it a free market but created something more akin to communism.

However the CA electric industry agreed enthusiatically with those new laws. 85% of all problems are directly traceable to top management. And so I report on my first investigation: PE&G formally called Pacific Electric and Gas is HQed in San Francisco.

From Information Directory of Company Histories:
"In 1986 Richard Clarke became chairman and chief executive officer of PG&E, and George Maneatis became president. While PG&Es managers had traditionally begun as engineers, Clarke was an attorney-turned-manager, ..."

Under his administration, Diablo Cayon nuclear power plant cost overruns became a serious problem. Although PE&G still had enough talent an infastructure to respond effectively in the 1989 earthquake. Eventually a nuclear engineer, Glynn, took over as CEO and cleaned up some of those problems. However when Glynn replaced Clarke, then a Chief Financial Officer, Smith, took over as President and CEO. Another short term thinker without dirt under his fingernails only means problems.

When the CEO and his staff are finance people, then it is the job of Directors to see that the company remains pointed in the right direction. However that assumes the Directors have some background related to the electric and gas utility business. Investigation continued with the BoD of year 2000.

One director, Conger, is a mining engineer. The rest of the BoD is classic of a company run by people who don't come from where the work gets done.

Davila - some undefined position in Home Depot although he may only be employed as a Director in 4 companies.

Clarke - as noted earlier a lawyer.

Glynn - the above chairman.

Smith - the MBA, and CFO who is now CEO.

Coulter - a finance educated Bank Executive.

Mary Metz - a college administrator and professor with a Doctorate in French.

Richard Madden - an MBA with executive background in forestry.

Dave Lawrence - an MD and hospital administrator.

J Sawhill - economist and conservationist.

B Williams - an MBA and Real Estate executive.

C Cox - only credits found were as a Director also AirTouch Communications.

No information was located on Rebecca Morgan and Carl Reichardt. IOW the Board is full of people who know absolutely nothing about utilities, electric production, distribution, or government regulation. What is a French Professor, an economist, and some MBAs doing as BoDs? We now know the answer.

PE&G and its associate energy shortages are directly traceable to these top managers. IOW it only proves again that 85% of all problems are directly traceable to top management - people who don't come from where the work gets done. CA does not have an energy shortage. They have at least one utility full of short term finance people (the American version of communism) and not enough people who come from where the work gets done. No wonder the free market does not exist in their electric utility industry.

[adamzion]

My electric supplier: Electric America.
What they are: a provider of hydroelectric power.
Where they're based: California
My rates: quite low, actually.

CA's a demonstration of how *not* to deregulate an industry,
Z

[tw]

The location of a corporate HQ is not necessarily same as the corporate operation. Was it not Santa Fe RR, the major southwest freight and energy company, that was based in ... Allentown PA?

CA is not a demonstration of "how *not* to deregulate an industry". CA's energy problems are only a symptom. It examples what happens when the 'powers that be' don't come from where the work gets done. In this case, all executives and lawmakers had no clue as to 'what is and is not' a free market. IOW CA's deregulation is a perfect example of why communism (also known as centralize decision makers) does not work.

Originally posted by adamzion
My electric supplier: Electric America.
What they are: a provider of hydroelectric power.
Where they're based: California
My rates: quite low, actually.

CA's a demonstration of how *not* to deregulate an industry,
Z