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GULF STATES UTILITIES COMPANY

GULF STATES UTILITIES COMPANY. In the early 1990s Gulf States Utilities Company, headquartered in Beaumont, Texas, was an investor-owned public electric-utility company that generated, transmitted, and distributed electric power derived from gas, coal, and nuclear sources to more than 578,000 customers in an area stretching from central Texas to Baton Rouge, Louisiana. The firm also sold electricity wholesale to municipalities and rural electric cooperatives in both states; supplied steam and electricity to industry; and operated a natural-gas retail distribution system that served 85,000 customers. In the early 1990s the firm's wholly-owned subsidiaries included Varibus Corporation (based in Beaumont), which operated gas pipelines in Louisiana and also sold engineering and drafting technologies; and GSG&T, which owned and leased back to Gulf States a generating plant near Willis, Texas. A third subsidiary, Prudential Oil and Gas (based in Houston), was a drilling company but became inactive when its oil and natural-gas reserves were sold in 1987. The company's other diversified interests included shipping; worldwide oil purchases; and research and development on new energy sources, energy conservation, and environmental improvements.

Gulf States Utilities traces its development to the New England company of Stone and Webster, an engineering-consulting company that serviced utilities through management contracts, often taking partial payment in stock, which it distributed to New England investors. In 1911, as holding companies began to replace the management-contract system, Stone and Webster formed a holding company called Eastern Texas Electric (of Maine) to accomplish a series of mergers involving ice, water, gas, and transportation properties. Though the Baton Rouge Gas Light Company, founded just before the Civil War, was the oldest of the holding company's multiple acquisitions, a typical example was the Beaumont Electric Light and Power Company, established to obtain an electric light and power property from the existing Beaumont Ice, Light, and Refrigerating Company, which not only provided electric light, but also managed the local water system and provided meat storage and ice. To increase daytime power use, Stone and Webster also acquired the Beaumont Traction Company in 1913 to run an interurban line between Beaumont and Port Arthur (see ELECTRIC INTERURBAN RAILWAYS). The same procedure was used to take the Port Arthur Water Company through the formation of Port Arthur Light and Power and Port Arthur Ice and Refrigerating, both operating under the Maine firm, which continued to grow through a series of company formations, mergers, and reorganizations.

Company-related clubs and activities burgeoned after 1918, as Eastern Texas Electric held its first company picnic and formed an Employees' Benefit Association in 1919; started a company magazine in 1922; and created an employee orchestra in 1923. After that company was dissolved in 1923, a new Eastern Texas Electric Company was organized and incorporated under the laws of Delaware in 1924 to provide a more flexible financial structure and to facilitate the acquisition of new properties in the holding company chain. By 1925 the combined operating companies had 449 employees and served 114,000 people.

Gulf States was ultimately formed from as many as seventy-five corporations, municipal and town distribution systems, and personal holdings consolidated into four large companies: Eastern Texas Electric, Western Public Service, Louisiana Electric, and Baton Rouge Electric. These companies supplied electricity, steam, water, ice, coal, manufactured-gas, natural gas, and bus, streetcar, and interurban railway transportation. Users included shipbuilders, port facilities, and firms involved in timber, cotton, sugarcane, salt, and sulfur. Gulf States Utilities Company was incorporated under Texas laws on August 25, 1925, and was "charged with the task of providing electric energy, gas, water, and ice to the public"; six days later it acquired Henry Jacob Lutcher Stark's Orange Ice, Light, and Water Company. The firm's first gas-fired electric generating plant, known as the Neches Station, was built on the banks of the Neches River at Beaumont soon after incorporation. Later in 1925 Stone and Webster formed the Engineers Public Service Company to control its public-utility operating companies through stock ownership, beginning with Eastern Texas (Delaware), which became a subsidiary in 1926. Other acquisitions of that year included the Louisiana Electric Company, Jennings Utilities, Lake Charles Electric Company, the Jefferson Traction Company, the Silsbee Ice, Light, and Power Company, and Hull-Daisetta Electric.

By the end of the 1920s, Gulf States Utilities Company's Kenneth Sutton had created the cartoon character Aleck Tricity, a forerunner of syndicated cartoon character Reddy Kilowatt, who appeared in 1928. Gulf States introduced a circle and shield as its corporate emblem in 1927. In that year Gulf States established interconnections with the transmission lines of Houston Lighting and Power. In 1929 it acquired Western Public Service, which comprised the properties of its western division. By 1930 the company served 120 communities and a population of 235,000 in a 30,000-square-mile area. Gulf States served as the major operating company for Engineers Public Service Company along the Texas-Louisiana Gulf Coast, and expanded into Louisiana to supply refineries and industry. By the end of the Great Depression, during which Gulf States Utilities Company had managed to both survive and grow, the firm was surrounded by lines of competing companies and electric cooperatives sponsored by the Rural Electrification Administration. In 1938 Gulf States merged with the Baton Rouge Electric Company and the Louisiana Steam Generating Corporation; acquired a Louisiana generating station; and began the construction of others at Lake Charles and Baton Rouge in Louisiana and at Port Arthur and Conroe in Texas.

In the 1940s the number of Gulf States customers doubled and its electric revenues nearly tripled, but utilities scandals, government regulation, and competition that had begun in the 1930s began to shape the company's development, forcing Stone and Webster to leave Engineers Public Service Company as the principal holding company in the chain. Unable to simplify its corporate structure by eliminating subsidiaries, and faced with the antitrust Public Utility Act of 1935, which sought the breakup of gas and electric holding-company systems, Gulf States Utilities separated from Stone and Webster and the holding-company system that had created it, to become a freestanding entity in 1947. Subsequently the company served as part of a power pool to assist the Tennessee Valley Authority with hydropower; built new plants and expanded others; supplied a growing petrochemical industry; and diversified into oil exploration, shipping, research and development, and worldwide oil purchases.

By 1975 the operations of Gulf States Utilities Company had been centralized in Beaumont and the firm served more than 400,000 customers in a 28,000-square-mile area stretching from southeast Texas to south Louisiana. In 1979 the company moved to new headquarters in Beaumont's Edison Plaza office tower. The first Gulf States Utilities Company coal-fired generating plant was completed in 1982 in response to the energy crisis, and at that time a nuclear generating facility, known as the River Bend Station, was under construction twenty miles north of Baton Rouge. By 1982 Gulf States had some 4,800 employees, over half of whom were represented by the International Brotherhood of Electrical Workers, AFL-CIO (see TEXAS STATE INDUSTRIAL UNION COUNCIL). Sales in that year had reached $1.7 billion, but energy-industry problems threatened the region's economy and brought the company near bankruptcy by 1986. In 1992 Gulf States merged with Entergy Corporation, a utilities company based in New Orleans. The merger allowed Gulf States to retain its identity and its Beaumont headquarters, yet the company position in the early 1990s remained precarious as the company faced strict Clean Air Act requirements and competition from private energy suppliers facilitated by the 1978 Public Utility Regulatory Policies Act.

BIBLIOGRAPHY: 

Howard Ricks Fussell, History of Gulf States Utilities Company, 1912–1947 (M.A. thesis, Lamar State College, 1966). Judith Walker Linsley and Ellen Walker Rienstra, Beaumont: A Chronicle of Promise (Woodland Hills, California: Windsor, 1982). Vertical Files, Dolph Briscoe Center for American History, University of Texas at Austin.

Diana J. Kleiner

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Diana J. Kleiner, "GULF STATES UTILITIES COMPANY," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/dpg01), accessed July 29, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.