Companies continue to embrace the back-to-basics strategy, and investors seem to think that it is paying off.
The CEO Forum: The Ultimate CEOs: Peggy Fowler
President and CEO, Portland General Electric
crowd they would properly ring-fence the utility, so the leverage should not matter in making the decision. What is your view on the likelihood of their success to try again to purchase utility assets?
Fowler: I think if they put enough money on the table and show that there is truly a benefit for customers, and a ring-fence to protect them from the leverage, they might able to get it done. I’m not sure most of those guys are willing to do that, because really what they have in mind is to buy it at a low price and sell it at a high price. Some of them, like MidAmerican, say they are in it for the long run. That will be interesting to see if they continue to be in it for the long run. Even in Oregon, Wyoming, Washington and other places, it was easier for [MidAmerican] because they were comparing themselves to Scottish Power. So a commission that ultimately has the final say on these things looks [and asks], “Is MidAmerican a better choice than Scottish Power, and what can we extract for the customer out of this?”
They were able to do that. But if there isn’t a problem or another company they’re trying to make go away, I think commissions are going to have a hard time approving these.
Fortnightly: There have been several attempts over the years by local government to “take over” or municipalize Portland General Electric’s existing utility’s poles, wires, substations and other distribution assets, despite your company’s objections. Can you tell us what you learned from these experiences?
Fowler: If you look at the public power side of things, that is something we have dealt with and all Northwest utilities deal with, as well as California from time to time. I think East Coast areas are going to see more of that too as prices go up, particularly those companies that have moved to deregulation. Look at what is happening in Baltimore right now with increased prices and no generation attached to those customers.
I think there will be a greater push for municipalization. The fundamental question is [whether] a government can more effectively or efficiently run a business than an investor-owned company.
Here in Oregon, because we are an old company, that’s one that we have been able to win and defeat. But it is something we will continue to face in the future depending on how the population changes and the interest for things like that. It’s definitely one we need to keep an eye on.
Fortnightly: Do you believe there will be stronger efforts to municipalize investor-owned utilities as a result of rate increases that have to be pushed through as a result of skyrocketing commodity prices?
Fowler: I think so. You look at the munis. Those guys thought they were in trouble back in 1997 and 1999 and they were going to go away. Well, they are all excited now. They think there are all kinds of prospects out there. They have a chance once again, particularly in those