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Laclede LEADER
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Doug Yaeger
pilots gas utility through increasingly complex environment.
In case you haven’t noticed, Laclede Gas is not just your father’s
gas company, or your grandfather’s or your great-grandfather’s—all
of whom may have received service from this public utility that
was operating in St. Louis before Abraham Lincoln occupied the White
House.
You may well not have noticed, because the man running Laclede these
days—Doug Yaeger—realizes that most people don’t spend much time
thinking about their service until they have a problem.
“Reliability and safety for our customers are our paramount goals.
The less our residential customers ever think about us, the better
job we’re doing,” says Yaeger, who serves as chairman, president
and CEO of Laclede Gas and of its recently formed parent holding
company, The Laclede Group. “All the scheduling, contracting and
storage management—along with all other details of making certain
our customers have the natural gas they need whenever they need
it—that should be our concern.”
Even the company’s ad campaigns—which once featured the late Jim
Varney’s intrusive “Ernest” character as the KnoWhatIMean?
know-it-all neighbor—now stress the reliability of the hassle-free
service Laclede provides. An ad in this very issue of St. Louis
Commerce Magazine carries the thought, “At moments like this,
when your family is warm and comfortable, you probably don’t give
a second thought to the natural gas used to heat your home. Isn’t
that the way it should be? Laclede Gas. One thing you can be sure
of.”
Laclede Gas, the regulated utility that is the core business of
The Laclede Group, is even trying to minimize the impact of significant
weather fluctuations on customers and shareholders. Laclede recently
received regulatory approval to implement a unique method of structuring
rates in such a manner that the utility will have greater assurance
of recovering its distribution costs, which are essentially fixed,
while protecting customers in periods of high usage due to colder-than-normal
weather by essentially “capping” Laclede’s recovery of distribution
costs from its customers at a level approved by the Missouri Public
Service Commission.
Under Yaeger, the Company also has developed and refined a risk
management process that uses financial instruments to limit customer
exposure to price spikes in the unregulated, nationwide wholesale
market for natural gas, by “hedging” against high wholesale price
levels. These wholesale prices and the associated costs of storing
and transporting natural gas from production fields to St. Louis,
typically make up two-thirds of a residential customer’s natural
gas bill.
“Our goal is to serve all our stakeholders—our customers, our shareholders,
our employees, and our community—in a beneficial manner,” Yaeger
says. “We are part of this community; our employees live and work
here— they’re customers and most of them also are shareholders.”
But when Yaeger became CEO of Laclede Gas in 1998, the Company’s
own success in achieving a nearly 90 percent share of the local
heating market made internal growth difficult to obtain. “We’re
in a mature market with marginal organic growth, so we needed a
new structure to give us a platform to pursue some growth entities
for the benefit of our shareholders, employees and customers,” Yaeger
says.
To that end, Laclede’s management team proposed that the Company
reorganize itself into a holding company structure. Shareholders
approved management’s recommendation in January 2001, and after
fulfilling the necessary regulatory obligations, in October 2001,
The Laclede Group was born. It is an unregulated holding company,
with Laclede Gas remaining a regulated entity and the Group’s largest
subsidiary.
Under Yaeger’s direction, The Laclede Group began looking for ways
to pursue measured growth opportunities. In January 2002, The Laclede
Group acquired SM&P Utility Resources, Inc. one of the nation’s
major underground facilities marking and locating services.
“SM&P was the right size. It had a centrally located multi-state
service area, and it was a business we knew because Laclede Gas
has more than 100,000 locates done annually on its system,” Yaeger
says. When the acquisition was announced, Laclede projected it would
be accretive to earnings in the first year, and it was.
“We have identified strengths and skill sets that we could focus
on in non-regulated businesses with which we are familiar and that
offer the opportunity for meaningful, sustained growth,” Yaeger
says. “We’re conservative in our approach, so we’re taking measured
steps in this effort. We want to digest what we have before we make
the next deal.”
Regulated or non-regulated, Yaeger believes that an organization
is never finished improving its processes.
“Our motto has long been, ‘Public service is our daily business.’
That’s still true. Our focus remains on the ongoing implementation
of improvements to our core business, the gas company. Growth brings
value and stability to our shareholders, employees and customers—and
it’s good for our community,” he says.
Community concern comes natural to Yaeger, who grew up in Webster
Groves (Class of 1967). “Our children [daughter Lauren and son Drew]
were the sixth generation of our family in Webster Groves.” Yaeger
himself was an All-State football player for the Statesmen, was
on the track team, and played baseball in the summer leagues. He
also was involved in the French Club, the Math Club and Student
Council.
Upon graduation, he attended Miami University, in Oxford, Ohio,
and received an undergraduate degree in marketing. He later earned
an MBA from Saint Louis University and graduated from the Advanced
Management Program at the Harvard Business School.
But it was as an undergraduate student that Yaeger broke into the
gas business, at Mississippi River Transmission Corporation (MRT),
then the sole supplier of natural gas to Laclede Gas. He says he
started “one rung below the mailroom.”
“Before they had copy machines,” Yaeger explains, “when you needed
more copies than carbon paper could handle, you used a machine called
a Multilith. They taught me how to run it.”
He found that operating a Multilith had its beneficial aspects.
“I received a great working knowledge of the company running the
financial statements, year-end closings, rate case filings and internal
memos,” Yaeger says. “It was necessary to actually read the material
in order to line up the print correctly on the page.”
MRT offered him a full-time job when he received his bachelor’s
degree in 1971. “I graduated on a Saturday, and started work on
a Tuesday,” Yaeger says. “Working for an interstate pipeline company
gave me great experience in Washington, D.C. However, while the
company was bought and sold twice, I was fortunate enough to stay
with the company and had the opportunity to work for two larger
corporations from right here in St. Louis.”
He worked his way up the ladder, ultimately becoming executive vice
president of MRT and then of its affiliate, Arkla Energy Marketing
Company. In late 1990, when the opportunity arose, Yaeger moved
to Laclede Gas Company as vice president-planning.
Subsequently, he took various VP positions touching on operations,
supply, technical services and marketing. In December of 1997 he
was named president and chief operating officer and became a member
of the Board of Directors. One year later he was made president
and CEO. And one year and one month after that, he was made chairman
of the board as well.
His experiences during two decades at a pipeline transmission company
has served him well at Laclede, where federal deregulation programs
have forced local gas companies to assume the responsibilities for
acquiring and managing gas supplies that the pipelines once provided.
Laclede Gas now contracts with more than 20 suppliers to obtain
natural gas from production areas in Louisiana, Texas, Oklahoma,
the mid-continent, and even off-shore in the Gulf of Mexico. Yaeger
says Laclede buys from producers with familiar names—Amoco and Conoco
—as well as smaller marketers. “And we contract capacity on multiple
interstate pipelines to transport the gas from the production fields
to St. Louis.”
Once it gets here, roughly two-thirds of Laclede Gas’ business involves
delivering natural gas to some 575,000 residential homes. For these
customers, Yaeger explains, “We have full responsibility, from wellhead
to burner tip, plus storage.”
Laclede service technicians provide expert customer
service. |
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Laclede also provides similar “full- service” to commercial and
smaller industrial customers, as well as contracting to transport
gas for large industrial customers like Anheuser-Busch, Chrysler
and Ford. “They obtain their own gas supplies and arrange to transport
that gas to our city gate. We deliver it to them from there,” Yaeger
says.
Laclede’s expanded supply responsibilities also increased its risk.
“Supply risk and delivery risk used to belong to the pipelines,”
Yaeger says. “Now we have to anticipate the customers’ needs for
gas and account for the 24 to 36 hours it takes to get it from the
field to the customer. We have to have reliable suppliers.”
Having so many suppliers is not entirely bad news for Laclede’s
customers.
“The diversity of supply gives you flexibility and competitive pricing,”
says Mike Spotanski, Laclede’s vice president—finance. “Is it more
difficult to manage? Absolutely. But the payoff makes it worthwhile.
It’s what you have to do to be reliable. One of our primary objectives
is to be a reliable provider of service to our customers and our
community.”
Lee Liberman, who led Laclede Gas for more than 20 years, is optimistic
about Yaeger’s strategy and execution. “Doug is a terrific person,
highly intelligent. He has good people skills and he can put his
finger on major problems.”
What’s more, says Liberman, “He’s done a good job in everything
that’s been given to him to do.”
Through the transition he is directing at Laclede, Yaeger remains
committed to serving the community. He serves on the boards of the
Boy Scouts of America-Greater St. Louis Area Council, the St. Louis
Science Center, the Central Institute for the Deaf, the United Way,
Webster University, the Muny and Civic Progress.
According to Terry Schwarck, executive director of the Boy Scouts
of America St. Louis Council, Yaeger’s commitment to community service
runs deep.
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Yaeger’s civic commitment includes serving on the
board for the St. Louis Science Center. |
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“Doug Yaeger has been on our board for half a dozen years. He takes
our mission very seriously. He has always displayed the highest
integrity and leadership,” Schwarck says. “He is concerned and serious
about the future of youth and of America. He sees that Scouting
delivers the high values and character that young people need to
become tomorrow’s leaders.”
In 2003, Yaeger will take on even greater community responsibility,
serving as Chairman of the Board of the St. Louis Regional Chamber
& Growth Association.
Dick Fleming, RCGA’s president and CEO, says “Doug is the right
man for the right time. He brings a terrific combination of rigor
and enthusiasm to everything he does, from his leadership at Laclede,
to his civic leadership.”
RCGA Chairman John Bachmann adds, “In addition to Doug and I co-chairing
the Leadership Exchange to Boston this past spring, we have worked
together on a number of very important economic development issues
concerning the St. Louis region—issues such as industry cluster
development, work force enhancement, improving the region’s transportation
system, revitalizing the region’s central city, reinvesting in distressed
areas of the region, and establishing a unified regional public
policy agenda. As I conclude my term as RCGA Chairman, I know Doug
will provide outstanding leadership for the metropolitan area.” |
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