Barriers to Entry:
both electric and natural gas distribution to its consumer base of 5 million. At 16,500 MW of capacity, it ranks as the nation's largest nuclear power operator. Contributing to the company's investor appeal are the cost benefits realized by the merger, with $100 million saved in the first year of operations alone. Co-chaired by Corbin McNeill and John Rowe, Exelon also stands as testimony to foresight in leadership planning, with the former PECO and Unicom CEOs alternating functional responsibilities during a five-year post-merger transition period.
Despite their diverse business enterprises and wide-ranging market strategies, Duke Energy, UtiliCorp, Allegheny Energy, and Exelon share a common attribute: strong Wall Street performance in 2000. Duke Energy's traditional approach propelled the company to an impressive 70.1 percent valuation gain, while UtiliCorp's broader-based tactics resulted in a 59.5 percent increase in share price. Allegheny Energy, which entered several new markets but remained a small company, gained 78.9 percent for the year, while the significantly larger Exelon saw its stock increase by 102.0 percent.
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The accomplishments of these CEOs typify the evolving mandate for electric utilities: Convert new challenges into a opportunities, while deploying resources strategically. The resultfor these and other forward-looking electric utility company CEOshas been enhanced profitability and shareholder value. And while the past is not a yardstick for future performance, the risks and rewards associated with an electric utility company's business pursuitsand its reception on Wall Streetlargely will be vested in the quality of its leadership.
Yet, as deregulation takes further hold, capital costs continue to climb and global competition increases, the threats facing the industry likely will intensify and broaden in scope. What leadership characteristics will Wall Street recognize and reward in the future?
Looking specifically at utility company CEOs, Wall Street likely will favor those who are more like their competitive market counterparts, with strong capabilities in finance, marketing, globalization and technology.
For example, familiarity with financing will be increasingly essential. Though the majority of CEOs traced their roots to engineering during the industry's long regulated era, the ongoing M&A activity that now characterizes the field necessitates that CEOs quantitatively assess new business opportunities and initiatives.
Electric utility company CEOs also will need to call upon experience in competitive environments, embodying responsiveness to consumers that is still new to the sector. As electric utilities engage in an ever-widening variety of businesses, the ability to synthesize strong marketing and branding will be essential to develop a loyal customer base that feeds the bottom line and Wall Street's appetite for results.
Similarly, effective interpersonal and communication skills will be key. One of the CEO's most important roles is that of corporate missionary, building and nurturing productive relationships with Wall Street analysts, while motivating employees to exceed targets.
Wall Street, home to a body of investors that has dramatically expanded in both size and sophistication, has recognized that electric utilities stocks are no longer the equity equivalent of a staid fixed income investment. In effect, the lens through which Wall Street and electric utility companies view one another has both widened and magnified.