James Quinn discovers how National Grid boss Steve Holliday has become a green lobbyist to the US while improving energy efficiency at home
"I don't want to sound messianic" chides Steve Holliday, after a 10-minute whistle-stop rant on all that is green in the world of power. Although the chief executive of National Grid may not want to sound like one of Al Gore's disciples, he's in danger of coming across that way.
The enthusiastic Holliday is in New York to launch a Grid-sponsored report on reducing US greenhouse gases. Having been part of a panel that has just introduced the report to a room of more than 100 US regulators, politicians, analysts and industry observers, he's understandably fired up.
The report, produced by consultancy firm McKinsey and the Conference Board of New York, finds that the US could reduce greenhouse emissions by 2030 by one-third of current levels at a manageable cost to the economy.
For Holliday, his role, and that of the rest of the power industry, is not so much about deciding what should be done, but more about informing debate.
"We've been very clear in providing a role to policy makers and regulators on both sides of the Atlantic," says Holliday, 51, who will celebrate a year in the job on January 1.
Referring to the McKinsey research as a "watershed moment," Holliday believes the impetus is available to ensure that decision makers do something about climate change.
Grabbing the 84-page report and flicking through it, he happens across some choice slides which show the need for abatement of greenhouse gases in the US versus the UK.
To those not au fait with the world of reducing carbon dioxide emissions, the charts are a little difficult to understand, although they do strikingly show the extent of north America's problem compared to that of the UK.
Holliday, of course, is keen on educating the audience on both sides of the Atlantic because of the fact that the Grid, since its $7.3bn (£3.6bn) acquisition of KeySpan earlier this year, has half of its business in the US and the other half in the UK.
But why should the Grid push such an agenda, given the industry has traditionally been one of the biggest carbon emitters? That is exactly why, says Holliday, clearly feeling that the whole topic is something that cannot be ignored.
He did not, he assures, have some form of Damascene conversion but, instead, began to be struck by the need to do something over the course of the past three to four years.
"The industry can play a part, especially as the biggest step change can come in power generation. In life you have to be a leader or a follower," he smiles, leaving little doubt as to which he wants to be.
Although he is clear on what needs to be done, he is also only too aware of the need to have a good relationship with the Grid's five different American regulators.
He shies away from discussing which strata of US government should be instrumental in achieving emission reductions, saying only: "It needs some policy impetus."
But as well as informing the industry, the Grid is playing an active role in doing its bit - and has been doing so for some time.
The company recently marked the 20th anniversary of its US energy efficiency programmes, resulting in saving more than 26bn kilowatt-hours of electricity in New England - the equivalent of taking 1.8m cars off the road.
In the current financial year, the Grid will invest $169m into its US customer's assets to boost energy efficiency - an investment Holliday says is "merely scratching the surface."
The company itself has a target of reducing its own emissions by 60pc by 2050 - in line with EU guidelines.
That policy forms part of Holliday's wider investment strategy which will see a minimum of £16bn invested in replacing and renewing the company's asset base through to 2012.
In the first half of the current financial year - for the six months to September - the Grid invested £1.5bn, a 38pc increase on the prior period.
The money will come from internal cash flow - the Grid generates in excess of £3.5bn a year. And although net debt will rise from £16bn to £23bn by 2012, gearing levels will drop as the value of the company's assets increases due to the investment.
Holliday, who spent 19 years at Exxon and three years at British Borneo Oil and Gas before joining the Grid in 2001, has brought a level of financial rigour to the role which is rare for someone who is not an accountant by training.
He has even been so focused as to adopt an interest cover target - of between 3-3.5 times, above which any excess funds will be returned to shareholders.
Holliday has made a promise to shareholders on this, and sets it out in a double-sided A3 laminate handout which he uses as a basis for his discussion with those investors.
But isn't the cover target a rod for his own back? "I like the business to be held to account," he smiles, stressing that he would rather shareholders knew exactly what they can expect.
This is made somewhat easier due to the largely regulated nature of the business, a business that has changed considerably under his stewardship.
Rather than the sprawling conglomerate many outsiders believed Grid to be following its merger with Lattice in 2002 - something which Holliday says was "more of a perception than a reality" - the business is now streamlined.
Gone are the Grid's UK and US wireless businesses, as well as an inter-connector business in Australia.
The firm's Ravenswood power station in New York is already on the block - and could fetch anywhere between £750m-1.5bn - and the firm is also contemplating disposing of its 500-or-so brownfield property sites in a single sale which could raise a further £800m. The result is a focused electricity and gas generation and distribution business, which is as much at home in the US as it has historically been in the UK.
In spite of the fact that the group does not cover the nation of the US - operating in just Massachusetts, New Hampshire, New York and Rhode Island - the corporate name will remain, Holliday argues.
"On the first day we owned KeySpan, we changed the name on a few of the key buildings to National Grid," explains Holliday. "But then I started getting emails from workers at smaller plants and buildings, wanting to know if they weren't important enough to get a new sign."
To back up how important a company's name can become in the US, he points to the fact that the Grid is now the US's second largest power company, second only to California's PG&E, whose chief executive, Tom King, Holliday poached to continue his US push.
He naturally won't comment on future US acquisitions - but does recount a tale of being given a hard time at US immigration on arrival during his current trip.
Initially the young immigration officer was being somewhat difficult, but when a supervisor came over and asked Holliday his job, and he said: "I'm the chief executive of the National Grid," she waved him through.
Although his next foray into the US power market is unlikely to be quite that easy, given Holliday's high-profile environmental lobbying role, and the job done so far with KeySpan, the Grid's American future seems sustainable.
"I don't want to sound messianic" chides Steve Holliday, after a 10-minute whistle-stop rant on all that is green in the world of power. Although the chief executive of National Grid may not want to sound like one of Al Gore's disciples, he's in danger of coming across that way.
The enthusiastic Holliday is in New York to launch a Grid-sponsored report on reducing US greenhouse gases. Having been part of a panel that has just introduced the report to a room of more than 100 US regulators, politicians, analysts and industry observers, he's understandably fired up.
The report, produced by consultancy firm McKinsey and the Conference Board of New York, finds that the US could reduce greenhouse emissions by 2030 by one-third of current levels at a manageable cost to the economy.
For Holliday, his role, and that of the rest of the power industry, is not so much about deciding what should be done, but more about informing debate.
"We've been very clear in providing a role to policy makers and regulators on both sides of the Atlantic," says Holliday, 51, who will celebrate a year in the job on January 1.
Referring to the McKinsey research as a "watershed moment," Holliday believes the impetus is available to ensure that decision makers do something about climate change.
Grabbing the 84-page report and flicking through it, he happens across some choice slides which show the need for abatement of greenhouse gases in the US versus the UK.
To those not au fait with the world of reducing carbon dioxide emissions, the charts are a little difficult to understand, although they do strikingly show the extent of north America's problem compared to that of the UK.
Holliday, of course, is keen on educating the audience on both sides of the Atlantic because of the fact that the Grid, since its $7.3bn (£3.6bn) acquisition of KeySpan earlier this year, has half of its business in the US and the other half in the UK.
But why should the Grid push such an agenda, given the industry has traditionally been one of the biggest carbon emitters? That is exactly why, says Holliday, clearly feeling that the whole topic is something that cannot be ignored.
He did not, he assures, have some form of Damascene conversion but, instead, began to be struck by the need to do something over the course of the past three to four years.
"The industry can play a part, especially as the biggest step change can come in power generation. In life you have to be a leader or a follower," he smiles, leaving little doubt as to which he wants to be.
Although he is clear on what needs to be done, he is also only too aware of the need to have a good relationship with the Grid's five different American regulators.
He shies away from discussing which strata of US government should be instrumental in achieving emission reductions, saying only: "It needs some policy impetus."
But as well as informing the industry, the Grid is playing an active role in doing its bit - and has been doing so for some time.
The company recently marked the 20th anniversary of its US energy efficiency programmes, resulting in saving more than 26bn kilowatt-hours of electricity in New England - the equivalent of taking 1.8m cars off the road.
In the current financial year, the Grid will invest $169m into its US customer's assets to boost energy efficiency - an investment Holliday says is "merely scratching the surface."
The company itself has a target of reducing its own emissions by 60pc by 2050 - in line with EU guidelines.
That policy forms part of Holliday's wider investment strategy which will see a minimum of £16bn invested in replacing and renewing the company's asset base through to 2012.
In the first half of the current financial year - for the six months to September - the Grid invested £1.5bn, a 38pc increase on the prior period.
The money will come from internal cash flow - the Grid generates in excess of £3.5bn a year. And although net debt will rise from £16bn to £23bn by 2012, gearing levels will drop as the value of the company's assets increases due to the investment.
Holliday, who spent 19 years at Exxon and three years at British Borneo Oil and Gas before joining the Grid in 2001, has brought a level of financial rigour to the role which is rare for someone who is not an accountant by training.
He has even been so focused as to adopt an interest cover target - of between 3-3.5 times, above which any excess funds will be returned to shareholders.
Holliday has made a promise to shareholders on this, and sets it out in a double-sided A3 laminate handout which he uses as a basis for his discussion with those investors.
But isn't the cover target a rod for his own back? "I like the business to be held to account," he smiles, stressing that he would rather shareholders knew exactly what they can expect.
This is made somewhat easier due to the largely regulated nature of the business, a business that has changed considerably under his stewardship.
Rather than the sprawling conglomerate many outsiders believed Grid to be following its merger with Lattice in 2002 - something which Holliday says was "more of a perception than a reality" - the business is now streamlined.
Gone are the Grid's UK and US wireless businesses, as well as an inter-connector business in Australia.
The firm's Ravenswood power station in New York is already on the block - and could fetch anywhere between £750m-1.5bn - and the firm is also contemplating disposing of its 500-or-so brownfield property sites in a single sale which could raise a further £800m. The result is a focused electricity and gas generation and distribution business, which is as much at home in the US as it has historically been in the UK.
In spite of the fact that the group does not cover the nation of the US - operating in just Massachusetts, New Hampshire, New York and Rhode Island - the corporate name will remain, Holliday argues.
"On the first day we owned KeySpan, we changed the name on a few of the key buildings to National Grid," explains Holliday. "But then I started getting emails from workers at smaller plants and buildings, wanting to know if they weren't important enough to get a new sign."
To back up how important a company's name can become in the US, he points to the fact that the Grid is now the US's second largest power company, second only to California's PG&E, whose chief executive, Tom King, Holliday poached to continue his US push.
He naturally won't comment on future US acquisitions - but does recount a tale of being given a hard time at US immigration on arrival during his current trip.
Initially the young immigration officer was being somewhat difficult, but when a supervisor came over and asked Holliday his job, and he said: "I'm the chief executive of the National Grid," she waved him through.
Although his next foray into the US power market is unlikely to be quite that easy, given Holliday's high-profile environmental lobbying role, and the job done so far with KeySpan, the Grid's American future seems sustainable.
From the Daily Telegraph
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