Wwp Gears Up For Future, Names New President Utility Positions Itself To Become National Power Marketer

In an effort to bounce back from its recent merger failure, Washington Water Power Co. announced a broad restructuring Wednesday aimed to make the company a national player in a deregulating energy industry.

The Spokane-based company initially will concentrate its ambitions as a marketer of electricity in the Southeast region.

“We expect within three years to be in the top five as far as marketers are concerned in the Southeast portion of the United States,” W. Lester Bryan said at a news conference. “We expect to be trading there by the end of this year.”

At Tuesday’s board of directors meeting, Bryan was named president and chief operating officer of WWP and was elected to the company’s board. Bryan, who has been with WWP since 1970, was previously a senior vice president with the utility. He becomes the 10th president in WWP’s 107-year history.

James Harvey retired as WWP president in 1994. Since that time, Paul Redmond, who is WWP’s board chairman and chief executive officer, also held the title of president until Bryan’s appointment Tuesday.

Under the restructuring plan, WWP started down the path that eventually will split it into two companies that will operate as subsidiaries of WWP, according to Redmond.

That split could occur in a matter of months or years, Redmond said, depending on changes within the utility industry nationwide.

One company will focus on energy delivery - the distribution of electricity and natural gas - which has been the foundation of the company’s long history. That makes up the part of WWP’s business that is subject to state and federal regulation.

The second company will deal with the wholesale marketing and trading of electricity on a national basis.

This is the area of the business that is headed toward deregulation. In a regulated environment, customers were the captives of utility companies serving their geographical region. Deregulation is opening up markets to competition among utilities regardless of their geographical ties to those markets.

In order to survive in such an environment, utility companies must adapt to a very different world. They must drive down their costs so they can deliver energy at the lowest possible prices, rather than having those prices set by regulators.

“Deregulation is going to take place very soon,” Bryan said, “probably sooner than many utilities are going to be ready for it. This restructuring allows us to position ourselves nationally so we will have the ability to compete effectively in those new markets that open up.”

Bryan said WWP expects to have a market presence in 48 states.

WWP’s planned merger with Reno, Nev.,-based Sierra Pacific was driven by both companies’ desire to be more competitive in a deregulating environment.

But the merger bogged down in the process of seeking federal regulatory approval, and the two companies finally abandoned the effort earlier this year.

But Redmond said the WWP restructuring announced Wednesday closely follows the proposed structure for the WWP-Sierra merger.

The company will have to acquire, lease or build power production resources in the new markets it hopes to enter. Existing resources in the Northwest will be reserved to serve existing markets.

The restructuring will not involve layoffs, Redmond and Bryan said.

“In fact,” Bryan said, “we’re hoping to be able to add to our staff because we will have more business than we can handle with our current employees.”

The restructuring does not mean that WWP has given up on the idea of a merger. Spreading operating costs over a larger customer base is vital to the cost reductions necessary in a competitive environment.

“We will continue to look at mergers, acquisitions, partnerships and joint ventures for growth of the company,” Redmond said.

But restructuring in the meantime is vital, he added, because, “We believe the best opportunities will come to us if we are performing well in the marketplace.”

, DataTimes ILLUSTRATION: Photo