CEO Who Expanded Magma Power to Retire
Arnold L. (Bud) Johnson, who came out of retirement to build Magma Power of San Diego into a highly successful geothermal energy producer, announced he will resign June 30. The company said it is searching for a successor.
Johnson, chief executive at Magma Power since 1987, oversaw as expansion program that led to a quadrupling of Magma Power’s generation capacity to four Imperial Valley plants totaling 138 megawatts of power. Over that time, the company also proved that it could profitably produce geothermal power with technology acquired largely from Dow Chemical, a 42% shareholder.
Magna Power, which has its headquarters in San Diego, last year posted a profit of $30.2 million on revenue of $85 million, making it one of the state’s most profitable publicly owned concerns. In 1986, the year before Johnson joined Magma Power, the company lost $1.6 million on revenue of $13 million.
The plant expansion was made possible because Johnson, 58, convinced J.P. Morgan bankers in New York to lend Magma Power $200 million for the construction of three plants. Johnson had previously spent 30 years in finance with Dow Chemical, retiring in 1986 as treasurer.
At the time of the loan, Magma Power’s geothermal technology had not conclusively been proven effective. The company’s first geothermal plant had only just opened. But Morgan made the loan largely on the strength of Johnson’s word that Dow engineers would find a way to profitably treat Imperial Valley geothermal brine. Up to then, the superheated Imperial Valley brine and its heavy content of dissolved solids had stumped other companies.
Magma Power sells all of its energy to Southern California Edison under contracts that have proven highly lucrative to the company. The contracts, mandated by the state in the mid-1980s, give incentives to alternative energy producers like Magma Power.
Besides the four plants, Magma Power owns 39,000 acres of undeveloped geothermal leaseholds in California and Nevada. Wallace C. Dieckmann, Magma Power’s vice president and treasurer, said the company plans to build more plants but said that “when and where are still questions.”
Johnson, who received his graduate business degree from the University of Michigan, will remain on Magma Power’s board of directors. The board has appointed a committee to select Johnson’s replacement, the company said. Johnson said he is quitting to spend more time in his native Michigan.
