Conflicting NRGs

Company’s shake-up and identity crisis 

Barry Smitherman, one of two newly appointed directors at NRG Energy, has called climate change “a hoax” in the past. He’s now in position to make major decisions for a company with significant renewable energy investments on hand. So goes the ideological crossroads facing the second largest power company in the U.S. right now.

Barry Smitherman. —Twitter photo

Most of NRG’s production still comes from coal and gas sources. However, it has recently made sizable investments in both wind and solar. In 2014, it set a goal of cutting its emissions in half by 2030. It also grabbed headlines last week upon completion of a 20 MW solar project in the California Sonoran Desert that will power Cisco’s headquarters.

Much of what is at loggerheads here is the emphasis on consumers vs. investors. NRG was balanced in anticipating a renewable energy-filled future, but it focused on marketing this strategy towards its consumers (see: NRG Home) instead of placating its investors.

Investment firm Elliot Management, along with Bluescape Energy Partners, control almost 10 percent of the company. The firm says NRG (headquartered in Princeton, N.J., but with a major corporate location in Houston) chose Smitherman for its board because of his deep knowledge of Texas, where the company has about a quarter of its generation capacity and is the largest competitive retail energy provider, according to the Financial Times. But many think the move indicates an intentional change of focus—one that diagrams how difficult it is for companies to play both sides of the fence when it comes to power generation. Travis Hoium of The Motley Fool, for example, wrote back in late February:

“Don’t be fooled: NRG Energy is heading for a breakup because dirty and clean energy just can’t live together.”

Hoium presents the bigger picture here. In the era of Trump, with companies grappling for position against great uncertainty, pressure has multiplied as to “choosing sides” on almost everything…and sourcing your company’s energy is one of the main battlefields. It’s become much harder to split the difference—invest in promising renewable energy projects while harboring doubts of climate change’s legitimacy—especially in the eyes of the public. NRG’s latest combatant is New York City comptroller Scott Stringer, who on April 6 wrote an open letter calling for Smitherman’s resignation. Stringer’s concern was, in short, a gross conflict of interest within the company.

NRG’s first quarter of 2017 seemingly reflects this; as it appears they’ll be in need of a comeback to win the financial year after a reported loss of $203 million. It seems that in the current climate (pun intended), a business must make a choice. Either stick with traditional energy sources, or go all in on ‘green’.

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