Kennedy-Founded Firm Beginning Program : Pasadena Poor Get Electric Bill Help

Times Staff Writer

A company that was founded by a member of the Kennedy family a decade ago to supply low-cost heating oil to the poor in Massachusetts will begin this winter helping Pasadena residents pay overdue electric bills during financial hardships.

The nonprofit Citizens Energy Corp. is bringing its mix of energy-marketing savvy and altruism to Pasadena by selling wholesale electricity to the city Water and Power Department and donating a percentage of its earnings to a new city fund to help needy families pay their electric bills.

Michael Kennedy, son of the late Robert F. Kennedy and chairman of Citizens Energy Corp., will outline his company’s participation in the city fund at a meeting of business and civic leaders Dec. 20 at the Pasadena Hilton. The meeting will open a campaign to encourage businesses and other utility customers to contribute to the city’s Project APPLE, or Assisting Pasadena People With Limited Emergencies.

Energy Crisis


Citizens was founded by Michael Kennedy’s brother, Joseph P. Kennedy II, and William E. James during the energy crisis of the late 1970s, when fuel-oil prices were soaring and poor families could not afford to heat their homes.

By buying crude oil on the world market, having it refined and then selling byproducts, such as gasoline, on the open market, Citizens was able to make enough money to sell heating oil at a discount to the Massachusetts fuel-assistance program for the needy. The program continues today. Company officials said they furnished more than 3 million gallons of heating oil to Massachusetts last year at 30% to 40% less than the market price.

In addition to the oil business, Citizens distributes natural gas and electricity and has started a joint venture with a New Jersey pharmaceutical company to sell prescription drugs by mail at a discount. It is also exploring for oil in Africa.

Earnings from its various ventures are used for everything from helping the poor to pay energy bills to running a demonstration farm in Nigeria.


Left After Election

Joseph P. Kennedy II left the company after he was elected to Congress in 1986, but the company has continued to grow under his brother, reaching $1.5 billion in revenue last year. It has 70 employees.

Beverly Watts Mayhew, director of programs and communications, said Citizens’ subsidiary, Citizens Power & Light Corp., is on its second power contract with Pasadena. She said the company has given $6,000 to Project APPLE from its first contract, involving the sale of electricity in 1987, and expects to contribute an additional $12,000 to $14,000 under a second contract, which began in October and will run for 6 months.

Citizens role is that of a broker, finding power companies with surplus electricity and than arranging to buy, transmit and resell it.


Under the contract, Pasadena is paying Citizens about $900,000 to supply enough electricity to meet 10% of the needs of its customers, said George Morrow, manager of utility resource planning. It would cost the city an additional $250,000 to generate the same amount of electricity in its own power plant. The electricity from Citizens is transmitted to Pasadena from British Columbia.

Purchases Limited

Morrow said the city is limited in the amount of outside electricity it can purchase by such constraints as the availability of transmission lines and the need to run its own power plant at efficient levels.

Edward Aghjayan, deputy city manager, said the city agreed to buy electricity from Citizens because it offered the cheapest price. The contributions to Project APPLE are an added bonus, he said, and the city intends to continue Project APPLE indefinitely through donations, regardless of whether it continues its relationship with Citizens Power & Light.


In a telephone interview, Michael Kennedy said he hopes his company’s initial donations will stimulate contributions by others to Pasadena’s Project APPLE.

“That’s part of our deal--improve the community spirit,” he said.

Michael Kennedy joined Citizens Energy at its beginning, took time out to attend law school and returned 2 years ago.

He said that although “it has been a tough year for us in the oil market,” diversification into such areas as the brokerage of electrical power has helped Citizens grow.


Providing electricity to Pasadena will not generate a large amount of money, he said, but fits the company’s goals.

“There’s a basic entrepreneurial spirit that drives us,” Michael Kennedy said, “and we always try to do some social good.”

Hardship Cases

Aghjayan said Project APPLE is designed to help residents who have encountered hardships, fallen behind in their bills and are in danger of having their electricity shut off.


Because the city has an obligation to “prudently manage” its utilities for the benefit of everyone, he said, the city cannot simply waive overdue bills for people with hard-luck stories. But by using money generated by the contract with Citizens and by soliciting donations from customers through utility bills and other means, he said, the city will be able to provide emergency help, starting in January.

Residents who have had a medical emergency, short-term disability, temporary job loss or other hardship and cannot pay their electricity bill can qualify for as much as $100 a year in assistance.

The program will be administered through Foothill Area Community Services of Pasadena, which serves about 40 cities and already runs a state-funded program that provides emergency assistance to people who cannot pay their utility bills. Lena Kennedy, emergency services coordinator, said the agency will use the Pasadena funds as supplemental help for Pasadena residents who have exhausted their eligibility for state assistance.