CEO Power Forum: Robert Green, President and CEO of Aquila
What role did Enron's bankruptcy and the California crisis play in UtiliCorp United bringing Aquila back into the fold?
I think Enron more than the California crisis highlighted the need for a broader, stronger balance sheet to execute our strategy. Those two events caused the rating agencies to raise the bar on everyone in the industry in terms of what was required for an investment grade rating. When you took that into consideration, it became clear that to execute the strategy, we needed the stable cash flows from the regulated distribution business in the business model to continue to pursue merchant opportunities. I think if you look at any of the endgame merchant players—and there's really not much more than a handful—they all rely on a stable base of cash flows from a regulated business, whether it be from a regulated pipeline or distribution.
Have Enron and California affected your strategy in any other ways?
Really, the business strategy, the competitive strategy has not changed. The way we'll finance it has changed with the recombination. But the strategy of providing wholesale energy and risk management services to wholesale energy clients throughout North America and beginning to do the same in Europe remains unchanged. With Enron's collapse, the big opportunity here is that there are a lot of world-class asset owners and operators but they need a merchant partner to optimize those assets real-time, 24 by 7, and there are a handful of companies that can do that and that's the opportunity for us.
Was this partnership strategy what brought you and NiSource together?