Mimi Walters wasn’t running for her old seat in Congress this October.
Instead, she was busy serving as the chief commercial officer for her husband David Walters’ startup, Newport Beach-based Leading Edge Power Solutions LLC, which provides natural gas fueled power generators to commercial and industrial customers.
“We got our first revenue check today,” she told the Business Journal in an Oct. 16 interview. “It feels great. We’re going to frame the check and put it up on our wall.”
Walters was well known in local political circles for the past two decades, which included a congressional seat representing central Orange County from 2014 to 2018. A Republican, she lost a bitter 2018 election to current incumbent Katie Porter, a Democrat who easily won reelection on Nov. 3.
Walters declined to discuss current politics during her interview.
Leading Edge Power was started three years ago by David Walters, who has been a long-time business executive in Orange County. From 1992 to 2000, he was managing director in charge of capital markets for the predecessor of Newport Beach-based Roth Capital, where he helped raise over than $2 billion for more than 100 public and private financings (see story, page 3).
Walters in 2006 also began his own firm, Monarch Bay Securities, to advise emerging growth companies.
Like Commercial Lease
With his wide knowledge about investment opportunities, why did David Walters pick the energy industry?
“It’s electricity—it’s an inelastic commodity—you have to use it,” he said.
Each customer signs a seven-year contract, which provides “extremely predictable cash flows.”
“It’s similar to a commercial lease on a building,” David Walters said. “It’s got a great margin. We get all our money back and the last four years is pure profit. The engine lasts 14 years at least.”
The company’s other co-founders also have a wealth of business expertise. Dick Paulsen was chief operating officer of Commonwealth Energy Corp., an independent energy service provider, while Mark Schneider was president of Castle Industries, a paper recycling company that expanded into maintaining complex computer rooms for the Department of Defense.
In October, the company received an equity investment for an undisclosed amount from BP Energy Partners LLC, a Dallas-based firm that is the family office of the late T. Boone Pickens.
Pickens, who died last year, is the co-founder of Newport Beach’s Clean Energy Fuels Corp. (Nasdaq: CLNE), which provides natural gas fuel and renewable natural gas fuel for the transportation industry.
BP Energy, which manages over $550 million, focuses on energy companies in the natural gas value chain.
“Across the United States, commercial and industrial clients face a daunting outlook for electricity costs and resiliency,” Nathan Brawn, managing director at BP Energy Partners, said in a statement.
“The nation’s aging infrastructure and escalating service interruptions continue to be juxtaposed to high-cost utility de-carbonization efforts and renewable portfolio standards, leading customers to seek behind-the-meter solutions to reduce energy costs and improve resiliency. We see Leading Edge Power Solutions as bringing these objectives together into a tangible turn-key solution,” Brawn said.
The Customers
Leading Edge Power targets customers with large facilities that peak at 500 kilowatts capacity or greater per hour, such as cold storage companies, plastic injection molders or the aerospace and defense industries. Thus far, it’s signed up five customers, including one at Terminal Island in the Port of Los Angeles and a Missouri facility.
Its partners include NRG Energy Corp. (NYSE: NRG) and Calpine Corp. Competitors include Capstone Turbine Corp. and Bloom Energy Corp. (NYSE: BE).
David Walters said Leading Edge Power designed a natural gas generator with a catalytic converter and software that are both proprietary. The manufacturer of the generator is outsourced.
The company covers the cost for installation, natural gas, operations and maintenance.
When peak hours hit, the generator can turn on to provide savings of 10% to 20% on electricity costs for the customer, he said. It can also automatically transfer power to the grid via an independent “backup” mode if it senses a grid outage.
The customer is charged only for the power it uses and is given a utility bill at the end of the month.
The generators have received operating permits from the South Coast Air Quality Management District, Walters said.
The company currently has five employees with plans for 15 by the end of next year.
Mimi Walters said her job is to help build the company’s sales. Since she was an elected official for more than two decades, she has “a lot of relationships.”
“It’s very exciting,” she said. “We’re having a great time working together and building the company.”
