Reliant’s Letbetter Quits as Chairman and CEO

Reliant Resources Inc., a power producer whose shares plunged 81% last year, announced Monday that Chairman and Chief Executive Steve Letbetter had resigned.

Letbetter, 55, issued a statement saying he was leaving “to pursue new opportunities.” The company named a Reliant director, Joel Staff, to serve as acting chairman and CEO. Staff, 59, is a former chief executive of National-Oilwell Inc.

Reliant, which plans to quit speculative energy trading because of losses and improper transactions, averted bankruptcy March 31 by refinancing $5.9 billion in debt.

Letbetter is not the first CEO of an energy company to step down in the wake of turbulence that has rocked the industry. Three other companies -- Dynegy Inc., CMS Energy Corp. and Allegheny Energy Inc. -- saw their CEOs leave after a collapse in trading eroded business.

“We’ve seen a number of chief executives leave troubled energy companies,” said Gerard Klauer Mattison & Co. analyst Michael Worms, who rates the stock “neutral” and owns none. Letbetter’s exit wasn’t just spurred by federal probes, Worms said. “It was sham trades, it was bad accounting, it was loss of credit rating, it was failed financing.”

Last month, the Federal Energy Regulatory Commission accused Reliant of manipulating power prices during the California energy crisis of 2000 and 2001.

Letbetter had to withdraw Reliant’s first $500-million public debt issue last May after disclosing sham trades that had inflated revenue. Restatements completed last month added $17 million to profit because of errors in accounting for energy trades and power sales.

The collapse in energy trading and a decline in electricity prices have slashed profits for Reliant and other power producers and energy traders. Reliant posted a $648-million net loss in the fourth quarter.

FERC gave Reliant and all other power sellers in California the chance to respond by Friday to a report by the commission’s staff that concluded the companies manipulated prices. The companies must show why the profits they made shouldn’t be returned to customers.

Shares of Reliant rose 17 cents, or 3.9%, to $4.52 on the New York Stock Exchange. They are up 40% so far this year.