Posted on 09/04/2002 3:53:49 PM PDT by lafroste
ST. PAUL (AP)--Minnesota Attorney General Mike Hatch has sent a letter to the board members of Xcel Energy Inc. (XEL) calling for them to fire the energy company's chief executive officer, Wayne Brunetti.
The letter said Hatch has "no confidence" in Brunetti. Hatch alleges, among other things, that Xcel's efforts to prop up its cash-strapped NRG Energy Inc. (NRZ) subsidiary might result in Minnesota electricity users having to subsidize other company operations - a charge strongly denied by Xcel officials.
Xcel board member Douglas Leatherdale described Hatch's call for Brunetti's ouster as "totally inappropriate" and added that the board supports the executive.
"I really find it very strange that an elected official would attempt to interfere in the board's decisions," said Leatherdale, who retired last year as CEO of the St. Paul Companies Inc. He has been a director of Xcel and its predecessor company, Northern States Power Co., for about 10 years.
Brunetti declined to comment, but Xcel provided a copy of a letter he sent in reply to Hatch. In it, Brunetti said Hatch didn't "fully understand either the details of our business or our overall strategy" and added that he was "shocked at the innuendo and misstatements" in Hatch's letter.
In an interview with the Star Tribune of Minneapolis Friday, Hatch was reluctant to expand on his statements in the letter, sent last week, and said he plans to file official comments about Xcel with the Public Utilities Commission Tuesday.
The dispute has been brewing for some weeks. Hatch has had several meetings with Brunetti and other Xcel officials, but he said in his letter that he hadn't gotten a satisfactory answer to his questions about NRG. He said that he called some of the directors before an Xcel board meeting on Wednesday and told them he thought Brunetti should be terminated.
He said that he never before has sent a similar letter or contacted outside directors of a company but that he was responding "as a public official who's received a lot of complaints about a threat to a major asset of the state."
While it's common for attorneys general to take companies to court, it is highly unusual for one to directly call for a CEO's removal, even in cases where a firm has admitted to a violation of the law.
In his letter to Brunetti and board members, dated Aug. 28 and obtained by the newspaper on Friday, Hatch said his office had been "inundated with criticism regarding its lack of public comment" about Xcel.
The utility is a widely held stock in Minnesota that has seen its share price drop sharply this year because of the financial difficulties of its NRG unit. The company's dividend is widely expected to be cut to help Xcel conserve cash.
Hatch's letter focuses mostly on Xcel's decision to buy back the publicly held shares of NRG, its unregulated power-producing subsidiary that has been hurt by falling electricity prices and aggressive expansion that left it with too much debt. Xcel had spun off a 26% stake in NRG to the public in 2000 and 2001. The company bought back those shares as part of an attempt to shore up NRG's balance sheet and prevent a default on NRG's debts.
Hatch accused Xcel of "throwing good money after bad" on NRG. Hatch also wrote in the letter: "Rather than servicing the millions of customers of its regulated services, the strategic concept of Xcel was to buy back NRG stock and transform Xcel into an Enron type of energy company."
Brunetti responded that Hatch's "unfounded and erroneous implications" could "undermine one of Minnesota's largest and most reliable companies." He said that Xcel's utility operations continue to be its core business and that Xcel has no intention of attempting to charge Minnesota customers for any NRG-related costs.
"We are managing the current situation so it will not jeopardize the financial health of the utility," Brunetti's letter said, adding that Xcel recently improved its financial health by renegotiating short-term debt and issuing new long-term debt. .
(END) DOW JONES NEWS 09-03-02
12:53 PM- - 12 53 PM EDT 09-03-02
"as a public official who's received a lot of complaints about a threat to a major asset of the state."
Strange, I thought Aquila was a PUBLICLY TRADED, PRIVATE COMPANY, not an "asset" of Minnesota.
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