Ex-Edison Chief Made Deregulation Pay Well
Former Southern California Edison President Michael R. Peevey knows the rosy side of deregulation. He made millions of dollars by starting an energy service company and selling it to one of the nation’s largest power generators in mid-1999.
“It turned out well,” Peevey acknowledged with a laugh.
“I’m still an advocate of deregulation,” he said Thursday. “But no doubt the California thing is flawed.”
Peevey, a blunt-talking 62-year-old economist with labor, business and government credentials, volunteered his help during the crisis. After meetings over the past several days, the governor named him a special advisor, a role that involves talking with utilities, financial institutions and power providers.
After spending most of his career working for utilities, Peevey ended up competing with them as an entrepreneur.
He retired from Edison in 1993, then did consulting work for 18 months before plunging into the world of start-up energy providers as deregulation loomed in California.
Since then, Peevey has preached the virtues of deregulation, saying the country could save billions of dollars a year in power costs through increased competition. “All that’s necessary is to introduce competition into the electric utility industry throughout the United States,” he wrote in the Boston Globe on April 26, 1999. “There’s some uncertainty just how much could be saved, but even the most conservative estimates produce huge numbers.”
In 1995, he had formed New Energy Ventures in Los Angeles, hoping to become a major player in delivering electricity in America. The company’s strategy was to purchase power on the wholesale market and sell it at cost to customers, while collecting a percentage of any savings.
The company, launched with three employees, thrived in the post-deregulation market, snagging big commercial, industrial and government customers. Within four years, New Energy had 265 employees and was rapidly growing, with revenues of about $700 million a year.
Peevey hoped to raise money and make a public stock offering, but instead the company was sold in June 1999 for about $100 million to AES Corp. of Arlington, Va., one of the biggest non-utility power generators operating in California.
A Securities and Exchange Commission filing on July 26, 1999, showed that Peevey received 198,822 shares of AES stock. Peevey said he told the stock for about $12 million, then reinvested in a diversified portfolio that included utility and energy companies.
He said he unloaded his California utility stocks several months ago. “It started to become evident there might be troubles on the horizon,” he said. In the past 10 days, he said, he sold stock in Enron Corp. and UniSource Energy Corp.
His wife, Assemblywoman Carol Liu (D-La Canada Flintridge), said Peevey sold the energy stocks to avoid any conflicts for her as a newly elected lawmaker who must deal with the energy crisis.
Six months ago, Peevey said, he started a new company, True Pricing, that helps customers choose the best cellular phone plan. He sits on the boards of several businesses and nonprofit organizations, including Excelergy Corp., a Massachusetts designer of computer systems that enables energy companies to do business on the Internet, and UtiliSave, which helps businesses through the tangle of regulations and deregulation.
Peevey, a UC Berkeley graduate and father of three, also has worked at the U.S. Department of Labor and UC’s Institute of Industrial Relations, and served as president of the California Council for Environmental and Economic Balance, a San Francisco-based nonprofit group financed largely by businesses, including utilities, and dedicated to bringing business and labor together.
He joined Edison in 1984 as a vice president. In 1990, when Chief Executive Howard P. Allen retired, Peevey was named president but did not get the top job.
Peevey is not one to mince words, said Victor Weisser, who succeeded him at CCEEB and was executive director of the state Public Utilities Commission in the late 1980s. “It was an adversarial role [at the PUC], and every once in a while Peevey would say, ‘What are you doing there, you idiots?’ ”
“He is hard-driving and knows his business.”
Peevey and Liu, a former mayor and City Council member of La Canada Flintridge, have contributed to numerous state and national Democratic candidates, records show. Loans from the couple provided $634,000 of the $1.7 million contributed to Liu’s campaign, said her campaign treasurer, attorney Stephen Kaufman.
“I’ve known [Gov. Gray Davis] for many years, and I’ve been a friend and supporter,” Peevey said. “I periodically talked to him. . . . I volunteered to help” deal with the energy crisis.” Although he said he has “no magic elixir,” Peevey said the state needs long-term contracts for purchase of power, construction and refurbishment of power plants, aggressive conservation and financial health of utilities. “There seems to be a building of consensus,” he said. “I am relatively optimistic.”
