He brought an increased focus on environmentally friendly technologies as Xcel Energy's CEO.
Dick Kelly has pushed Xcel Energy since 2005 to become a national leader in wind-generated power, more-efficient technology and conservation. The results have included double-digit decreases in emissions even as Xcel produced more power.
In his time as CEO, Kelly sold the Minneapolis-based utility's board on a lower-carbon future and investments in efficiency and emerging technologies that would end an internal climate/science debate and get ahead of looming state and federal regulations.
Xcel shareholders also have gotten greener under Kelly. Minneapolis-based Xcel, the largest utility in the Upper Midwest and Colorado, provided a 9.6 percent total annualized return to shareholders between January 2005 and June 30, 2011, compared with 7.1 percent for the S&P utility index and 3.7 percent for the S&P 500 index of America's largest firms.
When he retires in August, it will have been six years since Kelly became CEO and 45 years since he worked as a meter reader in Denver to help pay for an accounting degree at Regis College.
Kelly, 65, will be succeeded by Ben Fowke, 53, Xcel's chief financial officer.
QYou took over for Wayne Brunetti during a time of some tumult amid regulatory issues, including the controversy over the divestment of your then-troubled merchant-power company NRG. And your financial condition was nothing to brag about. What was your mandate?
AI told the board that I would strengthen the balance sheet, deliver earnings growth, improve our credit rating and move an environmental strategy that I thought was appropriate for the future. We needed to fix some things.
QYou bet hundreds of millions of ratepayer dollars on improving efficiency and generating 30 percent of your juice from wind and other renewable sources by 2020 in Minnesota, and meeting lower renewable mandates in adjacent states. You produce more power and less pollution since 2003, according to federal filings.
AThere was some risk. But Minnesota and the Dakotas were natural places to take a chance on wind. The wind is strong here. Some other utilities were getting 20 to 30 percent capacity out of wind turbines, but our tests showed we could get 40 or 50 percent. So that lessened the risk. I was worried about the regulators and customers. It turned out that this was exactly what they wanted. We spent a little more money up front, but the customers, the Minnesota Public Utilities Commission and [past] legislatures have been great [in supporting our strategic investments in efficiency, conservation and alternative fuels]. We now lead the nation in wind-generated electricity. Conservation and energy-saving technology are the cheapest form of energy and we have some of the most successful programs in the country for business and residential customers. New rules are coming out of Washington, D.C. We are ahead of them. I'm proud of that.
QAre you still concerned, as you were in 2009, that there might be a conservative legislative backlash?
AI don't think there is much of a risk for Xcel anymore. We are so far down the road. The technology has improved so much and so have the economics. Our rates are very reasonable compared with others around the country. I still think we as a country need to do something from an environmental standpoint. A price on carbon is the only way that we can lead the world. We did it at Xcel. As a country, we need to lead the world on this. The federal government is at a standstill right now. Maybe after the presidential election of 2012. That's politics. It can change in a hurry.
QCan we still get more out of efficiency and conservation?
AYes, we can. We've spent a lot on making you, the consumer, more efficient. We need to spend more on making our plants more efficient. Consumers, especially in Minnesota, have responded well to our conservation programs.
QWhat's the mandate for your successor, Ben Fowke?
AWe built most of our transmission facilities in the 1950s and 1960s, and we have not gotten as far down the road on rebuilding it as I wish. The system is fine and safe but [not as efficient as it should be]. It needs to be replaced. It's old.
QWhat's the problem?
ASiting. Nobody wants to be near a transmission line. I keep waiting for these folks who say we will get technology that will let us use the old lines for double the capacity. It always seems five to seven years out. And they've got underground lines, but that's not happening. ... So we're back to the old way -- [replacement of transmission lines with higher-voltage lines] -- and nobody wants them on their land. We also need more transmission from where the wind is. And that takes time.
Neal St. Anthony • 612-673-7144