Kate Thomas
OGJ Online
HOUSTON�UtiliCorp United Inc. by "yearend will be announcing something" with respect to its plans for the future of trading subsidiary Aquila Energy, CEO Richard C. Green Jr. said Tuesday at Arthur Andersen's annual energy symposium.
Aquila has been openly looking to combine its trading and marketing expertise with generation assets from another company and spin the resulting entity off to the public and to shareholders. The company is seeking a partner with electric generation assets similar to the merger deal struck by Dynegy Corp. and Illinova, company executives have said. UtiliCorp envisions a separate company for Aquila with the equity split one-third for Aquila, one-third the new partner, and one-third publicly owned.
Green would not be more specific during a press conference. But industry observers have suggested NRG Energy Inc., CMS Energy Corp., Calpine Corp., or even AES Corp. as potential partners.
Contributions from Aquila and international operations helped UtiliCorp boost 2000 third quarter earnings to $74.9 million from $42.5 million in the comparable 1999 quarter or 80�/share, up 74% from 46�/share in 1999.
Green said he doesn't consider the US an attractive market to acquire a utility, compared to certain international markets.
"Right now is not the right time to expand in the US," he said, where the growth rate for utilities is about 4%. "We don't see the value in that." However, the company has been actively buying interests in generating capacity. Aquila, the No. 2 wholesaler of power and No. 3 wholesaler of gas in 1999, recently said it will purchase interests in six power plants from GPU Inc. for $225 million. With the acquisition, Aquila will own or control more than 3,500 Mw of generation in operation, construction, or active development.
Successful companies will understand the value chain and choose where they will and will not do business, Green said. Internationally, UtiliCorp's goal is to replicate its successful US strategy of investing, optimizing, and monetizing assets in selected countries, he said. The company has replicated the Aquila model in Canada, where the company is trading 3 bcf/day and will trade about 65,000 Mw-hr this year.
Green pointed to an initial public offering of the company's telecommunications business in Australia as highlighting a strategy of unbundling international network companies and realizing the embedded value in these businesses.
Looking forward, he said Europe has "tremendous potential" that is "second to North America."