Former Florida Progress exec lands at Maryland utility
By ROBERT TRIGAUX
Published August 20, 2003
Joe Richardson just can't stay away from challenging jobs. The former executive who helped sell St. Petersburg's Florida Progress Corp. four years ago to a North Carolina power company was named president of Allegheny Power on Tuesday.
The Maryland-based energy delivery business is owned by Allegheny Energy, a financially strapped power company that only six weeks ago talked about pursuing a bankruptcy reorganization.
Richardson, it seems, likes business triage. Allegheny Energy is a corporation with some major maladies:
In late June, Allegheny said its common equity ratio - a cushion of financial stability - had dipped below minimum industry requirements. The company asked federal regulators for some financial leeway and time to sell off some assets. Without some flexibility, Allegheny said then, the company might have to seek bankruptcy protection.
After trading higher than $23 a share in the past year, Allegheny's stock fell below $3 last fall and has hovered between $8 and $9 a share for the past several months.
Then there's the small matter of Daniel Gordon. Gordon is a young man suspected of swindling Merrill Lynch & Co. out of $43-million.
How? At the too-young age of 24, Gordon ran Merrill Lynch's energy trading unit in 1999 and 2000 when deals were cut that artificially boosted earnings at Enron Corp. Enron, of course, later collapsed when its profits were revealed to be fraudulent. Merrill has paid regulators $80-million to settle charges of wrongdoing linked to the transactions.
What does this have to do with Allegheny?
Well, the power company had bought Merrill's energy unit in 2001 for $490-million. And Gordon was fired last year as head of energy trading at Allegheny Energy amid allegations he had violated conflict-of-interest rules in several deals. By 2002, the energy-trading market had collapsed in the wake of Enron's demise. Adding to Allegheny's woes, the power company found accounting errors associated with closing down its energy trading, requiring the company to restate its 2002 financial results.
I could go on, but you get the picture. Did I mention that Joe Richardson must like a job challenge?
Those of us who recall St. Petersburg's Florida Progress Corp. and its Florida Power utility, which supplied electricity to most of Central Florida, will remember the low-key Richardson as a rising manager who got caught in chaotic times.
A mild-mannered lawyer who joined Florida Power in 1976, Richardson became president of the utility 20 years later. By then, Richardson's bosses - Florida Progress executives Jack Critchfield and Dick Korpan - were embroiled in a controversial campaign of company cost-cutting and an overhaul of a corporate culture they considered too sleepy to deal with the industry deregulation they presumed was coming.
"The old idea of working here 20 years and then coasting - that era is gone," Richardson told me in an interview seven years ago when he was named president of Florida Power.
While Florida Power and parent Florida Progress talked a good game about competing in the years to come, the top executives were quietly looking for a buyer. Scottish Power, a Scotland power company, toyed with purchasing Florida Progress but instead called the company overpriced.
In August 1999, Florida Progress agreed to a $5.3-billion buyout by Carolina Power & Light Co. of Raleigh, N.C. The two companies, once merged, became known as Progress Energy.
Richardson worked at Florida Power during the merger but decided to resign in mid-2000. He said it was time for a career change, perhaps as "chief executive or No. 2 officer of a company outside the utility industry."
Richardson dabbled with a start-up business or two and worked on a Florida Chamber of Commerce project. Last year he became CEO of a young business in Odessa, north of Tampa, called Global Energy Group that specialized in developing ways to improve energy efficiency in air conditioning and heating systems.
But the call (and rewards) to return to the electric utility world was too strong.
Richardson, 54, is only the latest of many new executives hired to revive Allegheny Energy and Allegheny Power. As part of his signing package, Richardson will receive an "inducement award" of 50,000 or more units of company stock on Jan. 2, 2004. The incentive is based on a blend of the company's stock price at different times after Richardson joins the company.
Two months ago, Allegheny Energy said it had hired another veteran Florida energy executive, Paul J. Evanson, to take charge as chairman and CEO of the parent company. Evanson had served as president of Miami's Florida Power & Light Co., the largest utility in Florida.
How tough is Evanson's task? "It's somewhat encouraging that anyone took the job," said the utility analyst from Williams Capital Group.
Richardson's job as president of Allegheny Power may prove tough, but it is less daunting than Evanson's. J.D. Power and Associates actually gave high customer satisfaction marks to Allegheny Power in its summer 2003 survey.
Is Richardson heading for another utility tempest? Or does he see a win-win opportunity to run a business that may have nowhere to go but up?
