It all started with Hazel O’Leary. And three guys in a room. This brainstorming led to a new way for diverse businesses to participate in the energy sector. And along the way an energy-focused MBE consulting firm figured out how to grow its business and create a unique way to engage women and minorities in the energy and utilities industries.
The time was the mid-1990s. The U.S. had its first female and first African American Secretary of the U.S. Department of Energy, the dynamic Hazel O’Leary. And the utilities sector was working with vendors that were primarily white and male, especially in the area of fuel acquisition. Secretary O’Leary and other leaders felt it was time for a change.
Innovative Access to Capital
Will Johnson (one of the three guys in the room) was President of Visage Energy, a minority owned natural gas marketing firm. A former banker, Will knew that lack of access to capital had a detrimental impact on DBE firms’ participation in the energy marketplace. During the Oil Embargo in the early 1970s, Will developed an innovative concept at Citibank to utilize Bankers’ Acceptance Agreements to finance fuel oil inventory for Niagara Mohawk Power Corporation. He adapted this concept to address the lack of access to capital for DBEs in the utilities industry.
Working with Christopher Freitas of the U.S. Department of Energy, and Jeff Thorsen of Southern California Gas Co., Will developed a unique financing instrument that would involve banks, utilities and DBEs. The Funds Transfer Agent Agreement allows DBE vendors to use the strength of their specific contract with a utility (example: Pacific Gas & Electric) to purchase the fuel through a guarantee instrument with a participating bank (example: Union Bank) allowing the fuel producer (example: Amoco) to make the product available. With this idea, a major barrier to DBE participation in energy procurement was surmounted and billions of dollars in business was generated.
Envisioning a Clean Energy Future
Opportunities in gas marketing have diminished in the last 10 years with the fluctuation in fuel prices. This led Will and his new partner, daughter Daryl-Lynn Roberts, to again change the equation –this time by creating opportunities in clean tech through collaborations with national labs, universities and utilities. Building on Daryl-Lynn’s Stanford engineering background, Visage has created avenues to connect new technologies to commercialization opportunities and to help grow programs that encourage diverse scientists and entrepreneurs to create technology for the utilities industry. They are dedicated in their support of diversity and inclusion –founding the National Utilities Diversity Council and volunteering to help the Price Center for Entrepreneurial Studies at UCLA promote opportunity for diverse tech companies. Visage Energy continues to work on the deployment of innovative clean energy solutions that can positively impact DBEs and Disadvantaged Communities.
What happened to the Funds Transfer Agent Agreement? Like disco, it has never gone away; in fact it has experienced a resurgence. Will Johnson’s creative solution continues to make a difference for DBE businesses, and to honor the goals set out by Secretary O’Leary and three guys in a room over two decades ago.
(Jeff is no longer with us, sadly, but his memory is honored every time a DBE utilizes this unique tool.)
DOE finance panel December 1996: (left to right)
Jeff Thorsen Southern California Gas Company
Bill Cunningham - Creative Investment Resources
Will Johnson Visage Energy
Wally Roth Union Bank of California
Jeff Boling Amoco Energy Trading Company