Ken Glozer, President, OMB Professionals Inc.: “The Geopolitics of the Grid” was well done. I enjoyed reading it. Regarding the paragraph raising questions about why there are major...
The Ultimate CEOs: C. John Wilder, TXU Corp.
The CEO Power Forum: Not all utility CEOs are created equal...
talent gain. We interviewed people for management of the [new trading] company, for CEO of the company, and interviewed some of the potential key participants. And it just kind of died of its own weight. The cost structure was going to be four or five times what we thought it was going to be. We were hoping to set the enterprise up in Dallas, but the demands among the talent were, no, "Let's set it up in the New York area."
That wouldn't be a big deal to us, but it kind of bothered us a little bit. We thought wait a minute we're not trying to set up a hedge fund up. The reality is that that is what most of these managers wanted. They wanted our capital and access to our information flows on how commodities trade, and they just wanted to trade the commodities like a hedge fund. To be frank, that's where they can get the most economic gain personally. A good commodity trader can make a lot of money working for a hedge fund. It was one of those ideas that is a neat idea. I still think it is a good idea, but the market opportunity probably wasn't right. We had a lot of other things going on in the company that we needed to execute. It looked like it wasn't going to get there. It was one of these exercises where the view isn't worth the climb. And we backed off.
Fortnightly Given your company's involvement in competitive markets, what direction do you think policy is headed and what have you learned from your experience in Texas? What could have been done better in overall competitive markets and in Texas?
Wilder I think overall policy development, particularly competitive markets, will be slow. It takes a long time for people to get the memories of Enron and rolling blackouts in California out of their mind. We are mindful in Texas that we are the model in the United States, meaning that if Texas works it could lead to a much more broad scale and much more rapid restructuring of the market in the United States. That is just the reality. We are a very large reality, the largest power consuming state in the country, equivalent to a Great Britain in size. So, this is a big power market. Globally, we rank in the top 15 or so. It is quite high. If we were a country on our own we’d be the fifteenth largest electricity consuming country in the world. If we get this thing right and it works—I think it’s not a boastful statement to make, it’s factual—that if this works and it drives innovation and new investment and new efficiency, I think other states will catch on…The arch enemy of utilities is always the industrial customer. The industrial customer generally finds it offensive that the utility doesn’t have to be efficient, that they can pass on all their costs regardless of the bozo decisions that they make, etc. It just bothers them. Of