Wall Street analysts favor the utilities whose leaders think like they do.

Electric utilities have enjoyed a love/hate relationship with Wall Street in recent years. While market valuations have risen steadily in many industrial sectors, utilities have been riding a roller coaster. 1998 was essentially flat for electric utilities. Then the S&P electric index slumped by more than 22 percent in 1999. It rebounded in 2000, thanks in part to investor flight from Internet stocks, but not without a fair bit of carnage in California.

On one hand, it's natural to see changes in price performance for electric utility equities. (Witness the California crisis.) Yet certain utilities—and certain utility CEOs—have seen their efforts consistently recognized by Wall Street and rewarded by investors over the long term. With the many challenges facing today's utilities—such as consolidation, capital costs, debt burden, globalization, and deregulation—the CEO's role has become more important than ever.

Consider the following:

Case Study # 1. With 1999 revenues exceeding $22 billion under CEO Richard Priory, Duke Energy has "stuck to the knitting" even while widening its geography. Recently, Duke completed a $297 million pipeline to help bring natural gas competition to Australia. Anticipating deregulation in Canada, Duke expanded its commitments to nuclear power projects in that country. Domestically, Duke will furnish an additional 3,000 MW of power in California, whose peak demand has risen to more than 10,000 MW without the addition of a single generation facility in the past decade.

Case Study # 2. While a modest increase of 2 to 4 percent in annual earnings has been typical for electric utilities, UtiliCorp United CEO Richard Green has targeted and exceeded an 8 percent growth rate. To achieve this goal, he has led UtiliCorp in developing new operating units both inside and outside the utilities business. Aquila, for example, trades and sells energy-related products, while Quanta provides construction and infrastructure support for telecommunications. UtiliCorp now has 4.5 million customers worldwide, including Europe and the Pacific Rim. More than one-third of its $414 million in last year's earnings was generated through its international operations.

Case Study # 3. Based in the Appalachian foothills of Maryland, Allegheny Energy is an example of a utility whose strategic goals extend well beyond the geographic limitations implied by its corporate name. CEO Alan Noia has led the company-formerly a little-known rural supplier of coal-generated power-into markets as far west as Arizona, while simultaneously expanding into gas-fired plants. Allegheny's acquisition of Merrill Lynch's energy trading unit in early 2001 provided the company with another avenue for becoming a nationwide wholesaler of electricity. While its current policy of increasing capacity annually by 1,000 to 2,000 MW of power still leaves Allegheny smaller than many of its competitors, the company aims to deliver earnings increases of 10 percent a year, a rate unmatched by most utilities.

Case Study # 4. Exelon, forged through the merger of PECO Energy and Unicom, has established the goal of becoming the world's most admired utility service company. With diverse businesses in power marketing, deregulated energy, telecommunications and infrastructure services, Exelon provides