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Five electric utility chiefs are showing true leadership for their companies and for an entire industry.
Who are the best-of-the-best chief executive officers (CEOs) in the power industry? Fortnightly magazine wanted to know. After an almost unending parade of accounting scandals, credit downgrades, and overall corporate malfeasance that shook the industry to its foundation, true leadership is needed now more than ever. But just what is true leadership, and how do you measure it? Peter F. Drucker, a famed guru and authority on corporate management, has said that effective leadership is not about making speeches or being liked; leadership is defined by results, not attributes. Certainly, the CEOs profiled in Fortnightly's 2003 CEO Power Forum are leading companies with financial results that should be the envy and example to all of the utility industry.
We asked SNL Financial, the independent energy information and research firm, to analyze the sector and generate a list of profitability metrics for the 10 largest firms by equity market value (see below), which became the basis for our selection of this year's best-of-the-best CEOs. Then, the Fortnightly editors selected from the top companies those CEOs who, to paraphrase another Drucker maxim, did the right things in addition to showing stellar financial results:
- H. Allen Franklin, Southern Co., for his ability to show how a modern regulated utility is run successfully.
- John W. Rowe, Exelon, for his ability to show that utilities can succeed in competitive markets.
- Thos. E. Capps, Dominion, for his high ethics and uncanny exercise of good corporate judgment in avoiding the pitfalls of others.
- E. Linn Draper Jr., American Electric Power (AEP), for his leadership in restoring the reputation of a great utility name.
- Eugene R. McGrath, Consolidated Edison Inc., for showing what T&D utilities can accomplish, and showing true heroism on Sept. 11.
It is interesting to note how varied the companies' corporate strategies are-yet all have managed to make the list. Southern Co. (ticker: SO), which is in the number one spot this year, is a 100-percent regulated utility, while Exelon (ticker: EXC), in the number three spot, resides in two competitive markets, Illinois and Pennsylvania. Dominion (ticker: D), in the fourth spot, differentiates itself through its profitable exploration and production business, in addition to being an electric utility. Furthermore, Dominion managed to avoid merchant generation overbuilding and the energy trading scandal, and the company was one of the few that pursued an international strategy and turned a profit.
American Electric Power (ticker: AEP), having done some fine-tuning in response to its previous involvement in energy trading and the merchant sector, is managing to steer to calmer waters, making the ninth spot on the list. Last but not least is Consolidated Edison (ticker: ED), which as one of the largest wires businesses in the country, shows you don't need generation to be among the elite.
So, what is the future of the electric utility industry, and where is it going? In the following pages, five of the industry's top leaders talk about the strategy and future of their companies and the industry.