Companies continue to embrace the back-to-basics strategy, and investors seem to think that it is paying off.
The CEO Forum: The Ultimate CEOs: J. Wayne Leonard
case, a number of these customers will move to the North Shore and some will go out of state and won’t come back. I don’t expect New Orleans population levels will rise back to the levels that they were before in the next 10 years or so. The Chicago fire of 1871 or the San Francisco earthquake of 1906 are pretty good examples. It takes about 20 years for a city to really recover.
That’s kind of how Chicago and San Francisco evolved in to the cities they are today. It took a while. They made mistakes, they got things right, they got mass transportation, they got building codes right, they found the right places to build. It’s going to take a while to get back to the previous levels, but ultimately an event like this, time and time again, has shown that the city ends up stronger than it was before.
Because you don’t take incremental steps, you really [have to] step back and [evaluate] the fundamental changes that need to take place and say, “Let’s get ’em done.”
That’s New Orleans’ challenge over the next five years, to find those fundamental changes in the educational system, mass transportation, where we build, and how we build, so the city can be bigger than it was before. But that’s not going to happen in the next five years or so. We have challenges for five years, and decisions to make about where and how we build, and that is going to take a while.
Fortnightly: Should a utility have to declare bankruptcy as a result of performing its duties?
Leonard: It’s terrible public policy. You have an obligation to serve and you do that.You are paying, in our case, $1.5 billion dollars upfront, and you are the last to get paid. The utility was the only one prepared, the first to respond and probably the only one that did their job right, and is the last one to get paid.
In most cases, there is no profit at all built into any of that. You have losses because your customers aren’t there and aren’t taking the power. You have fixed costs that are not being covered. All you are doing is trying to get your money back for the actual outlay that you had in the storm; for poles, meters, and transformers and labor and those types of things. So, from a public policy standpoint, all it does is raise the utility’s overall cost of capital, and from an equity standpoint it seems patently unfair to be the last one on the list to get paid when you are the first to respond.
Fortnightly: What do you hope your independent coordinator of transmission (ICT) proposal will accomplish?
Leonard: This still is a major issue. Even though we felt like we were doing the right thing, building the right systems, following all the rules, and [providing] non-discriminatory access, there was always a perception by anybody who does business with an integrated utility that somehow you’re stacking the deck against them. Anytime you make