It was a bold statement.
In 2015, Spain’s Iberdrola announced that it would acquire UIL Holdings and combine it with its U.S. division—including regulated distribution utilities and its renewables arm—to form a new company, AVANGRID Inc. “We will be a leader in the transformation of the U.S. energy industry,” James “Jim” Torgerson, CEO of AVANGRID and formerly UIL’s CEO, said at the time. “A new American energy giant has been born.”
It was a big new opportunity, one of many that Torgerson has stepped forward and grasped during his 43-year career in energy. As the American Gas Association’s 2019 chair, he plans to use that same mindset as he aims for further boosting safety and resilience while fostering innovation in the natural gas industry.
Energy was far away when it came to a choice of career for young Jim as he was growing up in Cleveland. His major at Cleveland State University, after all, was accounting.
At the same time he was pursuing his studies by taking night classes, he was working full-time to pay his way, driving a tractor-trailer rig and hauling steel.
It was a tough gig, but it led him to a position with Diamond Shamrock Corporation in Cleveland, where he clerked in the accounting department while still attending college at night. That was the beginning.
Opportunity came his way again when the company invited him to grow with its business, first with a job in finance at its new company headquarters in Dallas, then with its coal operations in Kentucky to do treasury and strategic planning, then back to Dallas for a strategic planning role.
“I was always willing to move around,” said Torgerson, who is married to Mary Ann, whom he had met at Diamond Shamrock when she worked for its industrial chemical division.
When he was recruited to Seattle to head planning and development and later become chief financial officer of Washington Energy Company—which would be acquired by Puget Sound Energy some years later—Torgerson found a mentor in CEO Bill Vititoe. Moving from oil and gas exploration to the utility side was like a complete career change, according to Torgerson, but he flourished there, soon taking on the role of executive vice president and chief administrative officer.
Vititoe would later serve on the board of the new Midwest Independent Transmission System Operator Inc., the regional transmission organization that would maintain functional control over the electric grid and operate the Day Ahead and Real Time electric energy market across the Midwest and in the Canadian province of Manitoba. He brought Torgerson on at startup to serve in a similar capacity, then later as chief executive officer and president.
“I was given opportunities, and I took them,” said Torgerson. “Half the time I wasn’t looking for it, and half the time I was. It was just a matter of how things evolved.”
The breadth of experience he gained by taking on these roles of increasing responsibility had Torgerson reaching for more. At the Midwest ISO, he had set up a transmission grid system as part of the regional transmission organization and established energy markets—all from the ground floor—and now was essentially playing the part of a caretaker. He was ready to find an opportunity for more growth back in the for-profit sector.
Torgerson joined as president of the holding company and soon was elected CEO of The United Illuminating Company, its wholly owned subsidiary. A few months later, he was elected as CEO of the holding company.
It’s ironic that during his tenure, Torgerson transformed the company by acquiring Southern Connecticut Gas Company, Connecticut Natural Gas and Berkshire Gas from Iberdrola USA (whose parent company would later acquire UIL). UIL’s acquisition of the gas utilities created a diversified energy company and opened up an opportunity for UIL—as gas production was ramping up in the Marcellus Shale—to convert large numbers of New Englanders to natural gas from oil. It also leveraged Torgerson’s experience in leading both electric and gas local distribution companies.
“It’s interesting, when we were talking about buying those gas companies, I had to convince our board that it wasn’t that much different. I said, ‘Look, the real difference is one has pipes and one has wires, and one uses gas and one uses electricity. But other than that, a lot of the customers are the same, the regulators are the same and the way the companies actually get their returns and develop their profits are the same.’ You can learn a lot from both sides of the industry, and then you see the interconnection between electric and gas, with gas being used to fuel much of the electric generation of the country.”
Torgerson was also struck by another similarity. “Particularly for utilities, you have to have a great appreciation of the dedication the employees have,” he said. “Their focus—whether it’s gas or electricity—is making sure the customers are being treated fairly, that they get the energy they need, and [the employees] do anything and everything they can to make sure [that], if there’s an issue, they’re there to solve it for them. The dedication of the employees, that’s something—particularly with the utilities—that I found I liked.”
Off Time
While most of us are still sleeping, Jim Torgerson is multitasking.
Every morning at 4 a.m., Torgerson fits in a daily workout, running on a treadmill, using an elliptical or lifting weights, all while reading and catching up on the daily business news on television.
Golf was another pastime that helped him recharge, but those rounds have been rescheduled for now thanks to grandchildren: Torgerson and his wife, Mary Ann, make regular visits to the homes of their three children and five (soon to be six) grandchildren in Connecticut, Texas and Indiana.
That connection with customers is something Torgerson never wants to lose sight of, even as UIL has become part of an international operation. “Even though we are part of an international company that has a global reach, we still focus on the local communities we serve to bring them the best service and reliability we can, while also leveraging the expertise in new technologies and sustainable energy that Iberdrola and AVANGRID bring to the table,” he said.
Iberdrola has long been a pioneer in renewable energy and sustainability, dating back to the early 2000s, and the new alignment has opened up major opportunities. This includes the New England Clean Energy Connect hydropower project, which will leverage Hydro-Québec’s hydropower-generating fleet to supply 9.45 terawatt hours annually of baseload power to New England under a 20-year agreement. While approvals and permits are still pending, Torgerson estimates that construction will begin in late 2019 and that the project will be fully operational by the end of 2022.
Another project is Vineyard Wind, a 50/50 joint venture with AVANGRID Renewables and Copenhagen Infrastructure Partners that is set to be the nation’s first large-scale offshore wind farm, off the coast of Massachusetts. Pending approvals, construction is set for the end of 2019 or early 2020, with phase one and 400 megawatts of wind energy going online by the end of 2021 and phase two and the remaining 400 MW by 2022.
But as massive as these projects are, again, everything leads back to the customer. “It’s not just that we have sustainability and clean air goals—which we do—but it’s what our customers want,” said Torgerson. “So, we’re not only providing what the customers want from a clean energy standpoint, it is also becoming very affordable, and it means a savings for them.”
Succeeding in this environment takes a team approach, which is how Torgerson characterizes his leadership style. It’s something he has honed over the years, and he admits it took a while: “When you’re a lot younger, you tend to think you know everything … but then you realize working in a team is a lot more effective. You do things smarter, you get more buy-in. You can’t be out there on your own working as a Lone Ranger, so to speak,” he said. “When you’re working as a team and you have leadership responsibilities, particularly as you become an officer of a company, you have to all be working in the same direction.”
He describes it as “consensus-driven collaboration,” bringing a team together to share input, work through problems, develop a strategy and then implement it as a team. “I’m not one to just dictate what needs to be done,” said Torgerson. “Now, there are times I just have to make decisions—someone has to make them—but I will have to say we try to reach a consensus, and 99 percent of the time, I think we have.”
He points back to the Iberdrola merger as a prime example. During the process of essentially bringing together three cultures—UIL’s regulated utilities, Iberdrola’s regulated utilities and its renewables business—an integration team was formed to determine what changes would need to be made, addressing everything from payroll to information technology systems.
Torgerson also formed a management committee made up of senior leaders. It still meets weekly to talk through decisions and long-term strategy. Outside of the wind farm and hydropower agreements, AVANGRID is set to make $14.4 billion in capital investments between 2017 and 2022, with more than $9 billion slated for infrastructure at its electric and gas utilities in New England and New York, including replacing cast iron and bare steel gas pipelines. The remaining investment of more than $5 billion will bolster AVANGRID’s renewables arm, adding 2,700 MW of new generation by the end of 2022.
Those investments underscore Torgerson’s bold statement at the announcement of the merger. “Really, the focus of the merger of UIL and Iberdrola USA was growth,” he said. “It wasn’t one where we were focused on cost-cutting—it was really, ‘How do we grow this business, and how do we do it aggressively but profitably?’ That was the strategy overall.”
At the same time Torgerson was growing in the energy business, he was involved in AGA’s committees. He estimates that he has been involved off and on for the past 30 years, primarily serving with its finance committee, and he joined the board and executive committee in 2011. “I like getting involved,” he said. “It’s important that CEOs take the time to focus on what’s good for the industry overall and provide input into that. Especially for AGA, we’re a group of utilities that likes to work together, share best practices, make sure everybody is doing the right thing.”
It goes back to that team approach: “As a group, we can do a lot more to drive our mutual interests jointly than trying to do it as individual companies.”
As the 2019 AGA chair, his goal is to take a closer look at the issues that are top of mind to the industry, which is why he has set the theme for his chairmanship as “A Commitment to Safety, Resilience and Innovation.”
“Natural gas is a fuel that’s much cleaner and provides more opportunities for the future and to have a cleaner environment,” he said. “So, for me, it’s about making sure that our constituencies understand the benefits of gas for the country, the industry and our customers.”
Innovation has a role in redefining how utilities can incorporate renewables and natural gas, provide additional security in their systems from cyber and other attacks, optimize gas flow, improve efficiency of appliances, and even connect and better engage customers. Innovation also happens to be a core value at AVANGRID. “We take great pride in that,” said Torgerson.
The energy corporation has hosted an innovation forum for the past two years, bringing together teams comprised of minds from Massachusetts Institute of Technology, Yale and Cornell with experts at AVANGRID to compete in a Smart Cities Competition. The teams were challenged to develop innovative customer-centric business models for energy companies that will serve the citizens of future smart cities. Collaborations with top universities include a proof of concept based on blockchain technology to improve cybersecurity, developed by the MIT startup NeuroMesh, and the utilization of virtual reality modeling for microgrid design and utility system operators developed by Yale’s Tsai Center for Innovative Thinking. “Being open to innovation and new ways of doing things is one of the things I think we need to do more of in our industry,” Torgerson said.
Several years ago, Torgerson participated in a strategic planning session at AGA, reviewing analyses and various scenarios of where the association—and the industry—would go in the future. It was an interesting exercise, he recalls, identifying those opportunities and how AGA and the industry might achieve them.
“I think that’s still ongoing, and this is going to keep evolving, but I saw that as a real opportunity to make sure that AGA was going in the right direction for the industry overall because of what we saw the outcomes could be. Now, are we going to be exactly right? No, we’re not, but it put us in a position where we could adapt as things change. … It sets a tone for the future.”
What Customers (Including Jim Torgerson) Want
When Jim Torgerson became president of UIL Holdings, he and his family moved to a home in Connecticut that was fueled by oil. Naturally, he wanted natural gas, his preferred choice for heating and cooking.
“So, I called up the gas utility, which we didn’t own at the time,” said Torgerson. “They looked around and checked and said, ‘Well, we don’t think it makes sense. It’s too expensive.’”
Four years later, UIL had acquired that company, and Torgerson made the call again. “We went through the right process and canvassed the neighborhood,” he said. His neighbors, like him, wanted gas, so a line was added.
From a bigger picture, AVANGRID has a goal of being carbon neutral by 2035. That involves not just emissions-free generation, but also converting customers from oil to natural gas.
“Customers like it because it’s inexpensive, it’s cleaner than oil and it’s just a very efficient way to heat a home, to heat water and for cooking,” he said. “That is why our gas companies are now looking for more opportunities to bring natural gas to our customers in a cost-effective way.”