Columbia Gas System used to be known as an ossified giant of the regulated natural gas giant industry. Known primarily for its gas pipelines moving gas from the Gulf of Mexico into the Midwest as well as regulated distribution subsidiaries in Ohio, Pennsylvania, Maryland and Virginia, the company once suffered from bad management, high take-or-pay claims from producers, irate customers who sued the company for fraud and abuse, and a Chapter 11 bankruptcy filing in the wake of natural gas deregulation.
But investors who pulled up stakes when times got tough may live to regret it The company is now moving into the forefront of the energy market-in both natural gas and electricity-thanks to a CEO who has completely restructured the corporation. Columbia Energy Group set a record net income in 1997 of $273.3 million, or $4.93 per share, up $51.7 million from the previous year. Since 1995 Columbia's stock has gone from low $40 to mid $70 range, all thanks to the company's massive restructuring.
Oliver G. (Rick) Richard III took the reins of the battered giant in 1995, brought fresh faces to senior management (including the first woman to head a major natural gas pipeline company), moved the company's headquarters from Wilmington, Delaware to the Washington, D.C. suburb of Herndon, and firmly placed the company on a competitive track. Richard is well known in the natural gas community, having been the youngest Commissioner ever appointed to the Federal Energy Regulatory Commission, as well as serving in senior management positions at Tenngasco, Enron's Northern Natural Gas Company and New Jersey Resources Corp.
The results of the shake-up have paid off. Thanks to Richard the company has now moved out of bankruptcy and into the high-tech, competitive arena. The company recently announced plans to build three new power plants totaling 1,000 megawatts in Northeast North America, with Canada as one possible site. The proposal is a 50-50 joint venture with Westcoast Energy Inc. of Vancouver, British Columbia, and will no doubt take advantage of Columbia's massive natural gas pipeline and storage system (now undergoing a massive seven percent expansion to meet increased marker demand) with Westcoast's experienced constructing and operating gas-fired power plants, to compete in one of the most competitive emerging electric markets in North America.
The power generation deal followed on the heels of another announcement in early January that Columbia Gas System had changed its name to Columbia Energy Group. "If this were just a name change we could have issued a press release," said Richard. Although not the result of a merger or acquisition, the new moniker does reflect the fundamental changes that he has brought to the company.
"Columbia Energy Group is ready for change," said Richard. "Indeed, we intend to accelerate change in the retail marketplace, because those that adapt, survive. Those that don't, don't."
