Russell Transforms Energy Process

June 20, 2002
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GRAND RAPIDS — Picture yourself taking over a sprawling business with 18 manufacturing plants, 5,000 employees and 1.7 million customers, and then learning that you must cut prices 5 percent — while also facing the prospect of losing lots of those customers.

John G. Russell, of Rockford, speaks of these things rather lightly as “some of the challenges” he now faces as the newly appointed president and CEO-Electric of Consumers Energy.

The 5 percent rate cut, which applies to household customers, is a provision of Michigan’s energy deregulation process — along with an extended rate freeze for commercial clients. And in tandem with those temporary price controls comes the phase-in of customer choice whereby electricity users will be able to pick and choose among energy suppliers.

Russell told the Business Journal that while the coming changes fully engage his attention, they don’t particularly rattle him, because — in what he considers to be his biggest career break — he actually helped lead the Consumers team that put many of the pieces and processes in place.

“It was a great team of about 30 people,” he said. “The work was a very intense, complicated process, and it helped me learn just about everything this company does.”

That project was in addition to his duties during the past two years as senior vice president of electric transmission and distribution. His responsibility embraced 77,000 miles of high-voltage transmission lines and customer distribution lines, plus the work crews that maintain them.

“These are very, very important people,” he said. “They’re the ones who make the difference between a good company and a great company.

“You’ve got to consider that our generating plants manufacture a product which is invisible to the public. They really aren’t aware of it until they don’t have it.”

And when power goes out, the 5,000 linemen and service crews are the people who interact with the public. And sometimes, he said, it’s necessary to import workers.

Everybody, he recalled, grinning, remembers the enormous damage that Consumers’ grid sustained when 110 mph winds roared onshore from Lake Michigan the night of May 31, 1998.

“Boy, people were conscious of power then,” he said, noting that through reciprocal arrangements with out-of-state firms, Consumers ended up fielding nearly 10,000 workers to bring West Michigan homes and businesses back on line.

In his new post, Russell is responsible not only for that same power grid, but also for all of Consumers Energy’s power generating plants, plus all the firm’s administrative processes and staff.

As choice becomes available, that staff will administer a greater or lesser part of the process by which customers will select other suppliers and be billed thereby. Yet another challenge Russell must oversee will be the expansion of Consumers’ ability to import power from outside Michigan.

That state-line grid became a source of concern as much as a decade ago.

The concern, first, was because no new power generating plants were being constructed in Michigan and, second, Michigan’s power grid’s configuration, belonging to three companies, hindered easy electrical power imports from Indiana and Ohio.

As recently as summer of 2000, concern was widespread that Michigan was certain to face power rationing in some form.

But Russell said worry about an energy shortage is misplaced now, thanks to the energy restructuring process in Michigan.

“It’s a tribute to our legislature. The restructuring process Lansing put together is working very, very well. We’re going to have choice and, of course, we already have new companies building generation units in the state.”

He said that the peak energy requirement in the state is about 20,000 megawatts and that new third-party independent generating plants now under construction alone will generate 15,000 megawatts.

“There will be no shortage, and we may even have enough to export power,” he said.

Russell succeeds 53-year-old Frank Johnson who now has stepped up to serve as president and CEO of CMS Electric and Gas Co.

Russell’s headquarter office is in Jackson, but for some time to come he plans to spend a good deal of time in Grand Rapids. For one thing, he’s got to get to know the company’s power stations, many of which lie along the shoreline. Too, he and his wife, Margie, don’t want to uproot their sons, Matt and Mark, from Rockford High School.

Russell is a native of Royal Oak. He earned his bachelor’s degree in business administration from Michigan State University and completed an executive management program at Harvard Business School.

He joined Consumers’ general services department in 1981 and has been promoted through the company’s material services, economic development, customer service and electric customer operations.

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