As one of the hundreds of thousands of San Diego residents forced to evacuate during the wildfires in October, Donald Felsinger, CEO of Sempra Energy (NYSE: SRE), knew first hand the anxiety of that disaster -- and led his company to help those who lost more than just a few nights of sleep over the possible damage to a home.
The company created the Sempra Foundation, donating $5 million to assists victims of the wildfires throughout Southern California. It has been one of the most generous donations toward post-disaster recovery to date.
But the fires also shed light on a positive point for Sempra -- it validated the need for the upcoming Sunrise Powerlink, a San Diego Gas and Electric power network.
"The project remains critical to keeping the lights on in San Diego County," said Felsinger, whose Sempra owns SDG&E. "As the eighth largest city in the U.S., San Diego only has one 500 kV transmission line. In addition, the U.S. Department of Energy has designated the Southwest as a national interest electric transmission corridor. This designation highlights the same concerns at the federal level that we have been focused on here locally."
Felsinger noted that SDG&E made a filing with the California Public Utilities Commission aimed at addressing ways to further mitigate the impact to utility systems from extreme conditions.
"Given that Southern California has experienced near-drought conditions for nearly a decade, we feel it is appropriate to examine current state design standards to determine if changes are warranted," he said.
Felsinger's approach for growth is two-fold: first, to expand California utilities to meet the growing energy needs of Southern California; and second, to build natural gas infrastructure, including natural gas pipelines and storage, and LNG receipt terminals to help reduce the price of natural gas and electricity.
The company's work has received echoes of praise. This year, Sempra was named one of Fortune magazine's "Most Admired Companies" and made it on Business Week's Top 50 businesses list.
"It shows we are being recognized for our success in all aspects of the company," he said.
Sempra projects under construction include Energia Costa Azul center and the Bajanorte pipeline in Baja California, Mexico; Cameron LNG in Louisiana; and the 1,600-mile Rockies Express pipeline from Colorado to Ohio. The Rockies pipeline will open in January 2008. The Baja projects are set to begin operations in 2008, and Cameron is on track for 2009 operation.
Delays in acquiring permit energy projects, particularly in California, were a notable frustration this year.
"Although the Sunrise Powerlink has faced delays in its permitting, we continue to work closely with the California Public Utilities Commission staff to ensure the project goes forward with as many system and customer benefits as possible," Felsinger said.
He expects a final decision on the project in the second half of 2008.
Last year, Sempra sold a series of non-core assets, pushing its income up greatly in comparison to 2007. Net income for the first nine months of 2007 was $810 million, or $3.06 per diluted share, compared with $1.3 billion, or $4.92 per diluted share, in the first nine months of 2006.
"If you set aside those one-time gains (in 2006), our income from continuing operations for the first nine months of 2007 increased over 10 percent to $837 million, from $758 million in 2006," he stated. "We've narrowed the focus of our business strategy with a view toward investing in the businesses that we believe will produce superior economic results."