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The New CEO's

Michael G. Morris
Fortnightly Magazine - June 2004

will work very well together. How do you measure this? Certainly our earnings in stock price is going to be a major factor.

How have new corporate governance or Sarbanes-Oxley and new accounting changed the way you lead your company?

It hasn't been that different. We put in a corporate governance committee of our board in 1997 and began looking at a lot of things that Sarbanes-Oxley addresses. Certainly, not in as much detail in some of the accounting requirements. … When the act was first passed we looked at it hard, and our initial conclusion was that we're doing most of those things. Certainly, we put in new accounting procedures and our audit committee of the board is much more active. But this is not something that has turned our company upside-down by any means. We've already done a fair number of these processes.

You may not know this, but we are one of the top three companies as rated by Standard & Poor's for disclosure in our financial reports, as far as being open and clear and to the point. We are also the only energy company. I only make that point … to say that this is not new stuff for us.

How do you hope to grow earnings in your business? How would you define your company's strategy? Is M&A part of the plan?

The way I look at our earnings going forward is we are starting with a very strong core business which now contributes a little less than 90 percent of our net income. That's our two regulated electric utilities. And we think in the high growth areas where we are located that we will certainly in the near term be able to grow net income in the Carolinas and Florida by two to three percent. And if the economy takes off, we can do better than that. So, we are starting off with a base that is as strong as any other company in the industry because of our location.

On top of that, we have room to grow our wholesale business. Now, we do have some tolling contracts that are rolling off at the beginning of 2005. But we have very good prospects where we are dropping on the unregulated side-we have 3,100 MW. I think right now it is contracted to about 85 percent. Next year, that will drop off to about 60 percent absent of new contacts. We have some very good prospects on new contracts on that power from those unregulated plants that I think could be in place certainly during the second year.

So, we are banking on that and helping get back to the 80-percent range going out for the remainder of this decade at least. We could likely sign other contracts during that period also. I think as far as the regulated side, we are positioned to get further growth that could get us up to the five to six percent range of total earnings per share growth over the next couple of years.

Where will those contracts

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