Home » Corporate Social Responsibility » Leveling the Energy Field

Leveling the Energy Field

Companies that help people save money, earn money,” is not a statement you expect to hear from a company in …

Companies that help people save money, earn money,” is not a statement you expect to hear from a company in a highly regulated industry. But Oliver G. (Rick) Richard HI, president, CEO, and chairman of Columbia Energy Group, is not your typical leader.

While Columbia Energy looks like a typical company with assets of $6 billion and 7 million natural gas customers in 15 states, how many CEOs ask their staff “Are you having fun?” on a daily basis?

And how many companies ask regulators showing how customers will benefit, in the hope that they will someday win a larger share of a larger market?

“The first companies to take a chance have a lot more opportunity to shape the future,” says Richard. “Regulated franchise territories are crumbling. The problem is they’re not crumbling fast enough. There are a lot of regulatory hurdles. You need to convince regulators that what can be deregulated, should be.”

Richard is so sure that competition is where his company’s future lies, he has bet money on it-about $160 million in ’97, acquiring supply and marketing assets in unregulated areas of the market. Three years ago, 2 percent of Columbia‘s revenues came from unregulated assets; today it’s 10 percent. The goal by 2001 is 30 percent.

While championing consumer rights and pointing out customer benefits, Richard knows Columbia will gain the most from deregulation if things turn out as he hopes. “Those companies that push customer choice to the smallest customer create opportunities. This makes the market less stable, but a lot more lucrative and creative for those people willing to play in it…Monopolies tell you they treat their customers like kings and queens, but how do you prove it? Customers have only one place to go.”

Opening up a regulated industry has risks. In 1997, the company had a net income of $273 million, up $51.7 million over the past year. Return on equity was 16.3 percent, one of the industry’s highest. But Richard is not happy with this. He wants Columbia to grow at 10-to-12 percent annually and knows this growth can’t be achieved in a regulated market. This means expanding into new areas. He estimates the U.S. retail gas and electric market at $300 billion and says capturing a small piece of this offers enormous rewards.

But price and regulators are not the only barriers. Convincing customers to switch gas or electricity companies offers another challenge, because consumers often don’t know what’s involved in a switch and sometimes figure pipes need to be replaced and front yards dug up. Richard says education is the key. “Those first brave souls who used an ATM machine said ‘Hey, this is not so bad,’ ” said Richard. “Now everybody uses ATMs. We feel that choosing your gas and electric supplier will become as ubiquitous as buying a book from Amazon.com.”

To really succeed, says Richard, Columbia will need to be a combination company marketing more than one product-although not necessarily producing all of them. “If I can supply gas through my system which I own and operate, and other people can use my system, I’ve got a position in gas.”

It’s this kind of innovation that could push Columbia Energy out in front-that and a deregulated industry. “Every customer has to have the right to choose their own gas or electricity producer.” 

About mark young