AT Washington Water Power, Bobby Schmidt was appointed director of the company, and Paul A. Redmond announced his retirement as chair and CEO. Redmond started with the company in 1965. Previously...
10 Innovators to Watch in 1999
joining Detroit Edison as president and CEO in March 1994, Anthony F. Earley Jr. has had his hands full.
He has led the formation of a domestic energy strategy, one that is slowly building the $3.8 billion, 8,500-employee business around steely know-how.
Earley has brought in more than half his management staff of 15 from outside the industry. He has set a goal of 6 percent annual earnings growth. He wants to boost the company's historic 13-to-1 price-to-earnings ratio to 17, "because that is a measure of what the financial markets think of you ¼ Obviously, the more they're willing to pay, the more they think you have opportunities in the future."
Earley is making sure the utility's base business is competitive. That means being in the top ranks of utility producers. He has put together a plan that will move the business up from the mid-ranks on fossil fuel plant production. DTE Energy will have to slash $50 million from operation and maintenance budgets.
The company's final challenge is creating a portfolio of unregulated growth businesses. It generated $15 million in net income from unregulated operations in 1997. "We'll probably triple that this year," Earley says.
The company's strongest growth business is in producing different forms of coal, such as pulverized coal and coke, that it supplies to steel manufacturers. DTE's Energy Services Inc. subsidiary acquired a coke processing plant mid-year from Bethlehem Corp. for $200 million. Earlier, the same subsidiary purchased a limited partnership interest in a Knoxville, Tenn. coke plant for the same price.
In Pennsylvania, another DTE subsidiary, DTE Edison America, claimed more than 10 percent of the market open to customer choice. "We're using web-based technology as well as what we call an 'energy club' approach," Earley says. "[We] go to customers and for a flat fee per month we will get for them electricity at wholesale rates."
This past June, DTE Energy, in a joint venture with Mechanical Technology Inc., demonstrated a residential fuel cell that someday will be sold under the name Plug Power. "We intend within the next three years to have units on the market," Earley says. The price marker is $5,000 for a 7-kilowatt unit. "We believe it's going to take at least $100 million to get us to where these units will be produced commercially," the CEO says. GE Fuel Cell Systems and the Department of Energy will be partners in the development.
Earley says DTE can't forget the strengths its distribution system offers. Over the past five years, that portion of its business has risen from the bottom quartile to the top quartile in reliability. Similar gains have been made in customer satisfaction and cost to operate the system. The processes it took to revamp these systems are easily repeatable, he says, so the utility is looking over the Canadian border to Ontario. DTE Energy recently signed a joint venture with an Ontario utility to improve utility service ranging from setting up a call center to boosting system reliability. "Deregulation [in that market] may give us opportunities to pick up