Levelized rates can serve customers’ interests, while also accelerating capital investment and providing an economic stimulus to the economy.
Energy Innovators: Ringing in an Age of Enlightenment
corporate institutions, such as internal politics and executives that put their own interests ahead of the company.
To make certain that their interests should not stray from that of the company, both men pay themselves $1 a year and only earn income by building equity in the company and whatever dividends are paid. They say this will make sure their interests are aligned with those of shareholders.
Have Kinder and Morgan set a new standard by which other energy companies may soon measure themselves? - R.S.
How did you meet?
Morgan: We were at the University of Missouri together in the early '60s and ended up in law school together. We were friends then. We have known each other for more than 35 years.
It seems quite remarkable that Richard Kinder, Bill Morgan, Ken Lay, chairman and chief executive officer of Enron, and Jeffrey Skilling, president and chief operating officer at Enron, all knew each other.
Morgan: It is not a coincidence. Ken Lay and I were fraternity brothers. He actually was the one that hired me into Florida Gas about five or six years before Rich. There is a tendency to hire people that you trust and know are good. Ken hired me and then I ended up hiring Rich.
Kinder: Florida Gas got sold to Houston Natural Gas at the end of 1984 and less than a year later, Houston Natural Gas merged with InterNorth to create what is now Enron. Bill ran a number of the pipelines at what became Enron and left to go do private investment in the energy patch in 1986. I stayed on and then in 1990 became president [of Enron] and was president until the end of 1996. I was president for six years.
Basically Ken and I had always signed a co-terminus agreement, as Ken is two years older than I am. I had told him before that it was his company; if he wanted to stay on, it was fine. We were a good team. I think he would say that, too. But at some point I would run my own show. He decided quite rightly that he wanted to stay another five years. I said I am going to leave.
How was the business begun?
Kinder: Enron had made the decision to get rid of its liquids business during 1996. Bill had some investors with him. He had been the winning bidder of what was the general partner of the master limited partnership, which we had formed at Enron in 1992 to put certain pipeline assets with very small limited partnerships.
In early 1997, together as a group, the two of us and a minority partner, First Union Capital Markets out of Charlotte, bought the general partner from Enron.
What is the advantage of a master limited partnership?
Kinder: An MLP takes these sleepy assets and they return a lot of cash. Enron takes out a big chunk of money when they sell the stock and they usually keep maybe 15 percent of the stock. They keep the general partner's right