The Dickens novel A Tale of Two Cities opens with the classic line, “It was the best of times, it was the worst of times. . . .” That could easily sum up energy markets in 2008. Luckily for Powerex Corp., the first half was so robust that the company still ended its fiscal year (on March 31, 2009) with gross revenues of approximately $1.5 billion, despite the economic downturn in the second half. That’s a drop from $1.9 billion in fiscal 2008, but all things considered, Teresa Conway, Powerex’s president and CEO, views it as another strong year.
Conway proudly explains that the company was able to take advantage of high commodity prices and good price spreads early in the year. When the economy turned in the second half, Powerex relied on prudent business practices and its strong customer relationships to keep it steady. Conway elaborates: “When we saw the crash happened, we very carefully reviewed who we transacted with to make sure that we have financially worthy counterparties. . . . We reviewed our profile because a lot of the banks in the U.S. are in the power trading business as well.”
Conway has been with Powerex since 1994 and remains intrigued by an evolving energy business. Deregulation was on the horizon when she started, and the challenge of developing environmentally sustainable power was just around the corner. “There has been continuous opportunity for evolution of the business,” she reflects, “and from a personal perspective, for learning.”
As stimulating as her line of work is, it isn’t the easiest business to explain, and there are a lot of misconceptions about what Powerex does. Conway usually starts with the basics: “We buy and sell power and gas in the marketplace to earn a profit to keep BC Hydro’s rates low; our profit offsets BC Hydro’s costs, and that’s the benefit to B.C.” That surprises a lot of people who think the province is primarily an exporter of power. According to Conway, in nine of the last 10 years, B.C. has been a net importer of power. Powerex is an arbitrageur in the marketplace to offset the cost of those imports.
It’s a game that, when played well, benefits BC Hydro’s customer base. It’s also an easier game to play when the commodity markets are strong, which is not expected for 2009. Conway admits that, due to the economic downturn, the company is expecting lower margins in the coming year, and she hopes it will keep the profit shrink to a minimum. “We are into new markets, environmental products, with buying and selling renewable energy, renewable energy credits, leveraging our existing customer base. So we have a very strong business model even though there is an economic recession. There are still good opportunities for us.”
With the company’s success in taking advantage of the strong commodities market in early 2008 and in surviving through the downturn, it’s no surprise that Powerex jumped from 23rd last year to 18th on this year’s Top 100 list.
