HOWZAT

The review found PacifiCorp would require $5 billion of investment over the next five years and, however he looked at it, Russell could not justify this. Sooner or later, shareholders would demand he sold the business. Better to move now.

Then MidAmerican offered Russell a way out. At his annual meeting in early May, Buffett said Berkshire faced huge problems spending its enormous cash pile — more than $40 billion. He told investors there was one deal on the horizon — a “small” insurance company that would cost less than $1billion. He also mentioned that the company was interested in doing deals in Europe.

If Buffet knew about PacifiCorp then, he wasn’t letting on. But however the opportunity presented itself, Russell quickly grasped it.

He has still been left bruised by the decision. It is not the first time he has sold a business at a £1 billion loss. “We made a loss on selling our Southern Water business in 2002, but was it the right thing to do? I think it was. We have sold PacifiCorp, but was it the right thing to do? I think it was,” he said.

One fund manager at a top-five shareholder in ScottishPower said: “This ends a rather sorry episode. They paid about $12 billion for something five or six years ago and have basically received $9 billion back and the dollar has moved in their favour in the meantime.

Other investors said Russell now has the opportunity to improve his company’s performance. Ultimately they want Scottish Power to match its rival, Scottish and Southern. Scottish Power currently trades on a p/e ratio of 11.5, compared with its rival’s 13.6.

Disposing of Pacificorp will be complicated, so it makes little sense to ditch the chief executive now. Better to let him stay and guide the company through the obstacles ahead. “Maybe he has another 12 or 18 months left, after which I expect him to make an elegant exit,” said one fund manager.

It was never meant to end this way. When Russell arrived as finance director under Sir Ian Robinson, ScottishPower was breaking out of its traditional electricity business via the acquisition of Southern Water.The addition of Scottish Telecom, later to become Thus, created the third leg.

“The two Ians” who ruled the roost at Atlantic Quay, ScottishPower’s offices in Glasgow, had created the first and biggest multi-utility — covering power, water and telecoms. ScottishPower was, it seemed, the utility model for the future.

Many who worked at Atlantic Quay at the time recall the stark contrast between the two Ians. Robinson, the bluff, football-mad engineer, easily grabbed the headlines from the austere Russell, a micro-manager who crunched the numbers line by line. On his arrival from Tomkins, which owned Smith & Wesson, Russell hung a framed picture of a shotgun on his office wall. “We thought it was a bit inappropriate at the time,” said a former colleague.

If Russell saw himself as a hired gun, he was soon forced to prove himself as the multi-utility model unravelled. As chairman of Scottish Telecom, he masterminded its flotation as Thus, which netted ScottishPower the best part of a £1 billion and created — for a while — a FTSE 100 company during the dotcom boom. Thus is now worth just £200m, crippled by ferocious competition.

Southern Water fared no better, being sold off by Russell with ScottishPower taking a £1 billion hit. By this time, Robinson had retired and Russell was its chief executive; the failed multi-utility strategy was rejected in favour of international ambitions.