Green With Energy

Fort Worth Star-Telegram
June 7, 2001

When North Texas multimillionaire Sam Wyly was on the media griddle last year for buying political ads for candidate George W. Bush, Wyly's critics may not have realized that he is one of the biggest individual investors in alternative energy production in the United States.

"I guess people just don't believe that you can be a Republican and a tree-hugger," Wyly said jokingly. The 66-year-old businessman has made several fortunes in computers and investing, led by University Computing and Sterling Software.

Wyly has bought a 50 percent stake, amounting to $150 million, in Green Mountain Energy Co., one of several power providers that is marketing residential electric service to Texans as part of the state's pilot deregulation program. Wyly's fortune was estimated at $750 million last year, by Forbes magazine, which ranked him 382nd on its list of the nation's 400 richest people.

Wyly feels strongly enough about his investment that he has begun distributing a video titled"California Got it Wrong, Texas Got it Right." In the video, Wyly compares the deregulation fiasco in California with the more successful deregulation in Pennsylvania, and emphasizes that deregulation is the best opportunity to promote clean, alternative sources of energy such as wind and solar power.

Green Mountain is offering 100 percent wind-powered electricity to Texas consumers. The company's power comes from a Windmill farm in Pecos County owned by Enron Corp. of Houston.

There's no guarantee that the actual electricity that will come into a Green Mountain customer's house will be green. There's no way to assure that the electrons that go from the Pecos wind farm onto the Texas power grid will find their way to a specific customer. But Green Mountain's customers can have the satisfaction of knowing they are investing in renewable, nonpolluting alternative power.

"We're upfront with customers about the power that they actually will use, but we assure them that we are generating clean power," said Gillan Taddune, vice president of Austin-based Green Mountain.

Formed in Burlington, Vt. (hence the Green Mountain moniker), Green Mountain has offered its"clean" power in deregulated markets in California, Ohio, Connecticut, Pennsylvania and New Jersey.

Energy giant BP, formerly known as British Petroleum, became an early investor. Wyly was contacted, he said, "by a bunch of kids, who told me all about green power."

Wyly's involvement became a brief issue in the Republican presidential primary in spring 2000 when he paid $2.5 million for advertisements on behalf of Bush, attacking Sen. John McCain's environmental record. Critics said the ads by Wyly, whose backing of Republicans dates to Richard Nixon's campaign in 1968, was a vehicle by Bush to circumvent campaign finance laws.

Despite his status as a financial mogul and resident of tony Highland Park, Wyly has long been interested in alternative power. But unlike many environmentalists, Wyly's interest is based in economics.

"For 150 years, polluters were allowed to pass on their external costs," Wyly said. "That isn't true anymore. Americans are ready to put a value on clean energy."
Wyly said that while most Americans are aware that their automobiles soil the air, electric generation is also a major polluter.

"People don't know that electricity can be made either clean or dirty," Wyly said.
Last year, Green Mountain shifted its headquarters from Vermont to Austin to prepare for Texas' power deregulation, which is set to go in full effect Jan. 1.
Although California has captured the nation's attention with rolling blackouts and soaring power bills in the wake of deregulation, Texas utility leaders said it will be different here.

"Texas has much better capacity and a much better deregulation law," Taddune said. "Texas will be a model for deregulation for the rest of the U.S."

If that happens, Taddune said, green power will have the best commercial opportunity in its history.

Wyly thinks so, too. Most of the money he sunk into Green Mountain came from his share of the $8 billion sale of Sterling Software, the company that he founded in Dallas in the early 1980s. Wyly sold Sterling in March 2000, just before the tech investment bubble burst.

"I think that if given the choice, a lot of people will choose clean power," Wyly said. He was also involved with Datran, a communications company formed in the aftermath of the breakup of the Bell system in 1982, and before that, he was a computer systems pioneer with University Computing Co., which Wyly founded in 1963.

Green Mountain declined to say how many Texas customers it has signed up. Taddune said only that"it has exceeded our internal expectations. We are elated so far."

Green Mountain isn't the only player in the green game. Other providers, such as TXU of Dallas and Reliant Energy , are offering green variations as part of their general marketing. Green Mountain, however, is the only Texas provider that says that 100 percent of its power will be nonpolluting.

Green Mountain isn't totally free of fossil fuels. Although it promotes 100 percent wind-powered electricity in Texas courtesy of the Pecos County wind farm, the green promotion in Ohio and Pennsylvania has been built around a switch-over of generating plants from coal fuel to cleaner natural gas.

"Our whole marketing thrust is to enable customers to participate in the switch to cleaner energy," Taddune said.

Green Mountain's marketing is different from its utility-based competitors. Taddune said that the company works a lot of street fairs in Houston and the Metroplex, its main target markets. It also donated 10,000 trees to Texas to replenish damaged forests.

But she rejected the notion that green power advocates are upscale, so-called Ben-and-Jerry liberals who are above average in income and education.

"We reject the notion that green power is favored only by elites," Taddune said. "The interest for green power cuts across all social and economic lines."

Wyly said that Green Mountain's friendliness to natural gas has helped him maintain his friendships with his oil- and gas-loving Texas neighbors. He noted that most new electricity- generating plants that have been licensed in Texas, California and elsewhere are mostly gas-fired.

"People don't fully understand that the concept of green power is really good for natural gas. My friends don't think I'm odd for promoting green power, at least they don't say to so my face," Wyly said.