HONOLULU, June 5, 2003 — The electric power industry has made significant strides in restoring investor confidence in the past twelve months, yet more work remains to win over Wall Street and the investor community, outgoing Edison Electric Institute Chairman Erroll B. Davis Jr. told the association’s annual convention here.
Before turning over the reins of leadership this Wednesday, Davis, chairman, president and CEO of Alliant Energy Corp., Madison, Wisc., outlined the major issues facing the industry, and he recapped highlights of year as chairman. “We have faced some daunting challenges, and I believe we have met them very well,” Davis told the EEI convention. “Restoring investor confidence is the most important issue we’ve faced.”
Citing a list of accomplishments, Davis said, “We went all out to demonstrate the value of our shareholder-owned companies.” Topping the list, he said, were grassroots efforts by EEI members-resulting in 70,000 letters to Congress-in support of federal economic stimulus legislation, which slashed the top tax rate on dividends to 15 percent and which already has helped the sector.
Davis also mentioned EEI’s master netting agreement, an EEI-commissioned study by Deloitte & Touche on compliance with the Sarbanes-Oxley Act, and collaboration with the Committee of Chief Risk Officers on best practices.
“Still, the challenge of restoring investor confidence will continue throughout next year,” Davis said. “I cannot stress enough the importance of continuing to demonstrate to Wall Street that our industry is complying with new accounting and disclosure standards. We must continue this work both as individual companies and collectively through EEI.”
Turning to a still-brewing debate, Davis predicted that “we will finally see completion and passage” of comprehensive national energy legislation, which is being debated this week in the U.S. Senate. Noting that support for fuel diversity is at the heart of the legislation, Davis also said there are a number of important provisions in both House and Senate versions that can help jumpstart the electric power sector, including PUHCA repeal, federal siting reform, open access requirements for public power, and significant tax provisions.
“While we may not like every aspect of the bill, the fact that Congress has finally taken action on an energy policy will help Wall Street and the financial community believe that our industry is returning to stability,” the Alliant CEO stressed.
Regarding another major industry issue, FERC’s sweeping Standard Market Design rulemaking, Davis told the EEI meeting that “standardizing the rules for wholesale markets is useful as long as it recognizes and accommodates the realities in which we are operating.”
Davis added, “When FERC first unveiled SMD, it seemed like an unstoppable and unalterable approach to wholesale activity. Some of it was good; some of it was not workable. But EEI stepped up to the challenge and worked very closely with FERC, state regulators and stakeholders around the country to move SMD from a ‘one-size-fits-all’ position to a more flexible, regional approach that keeps moving closer to EEI’s principles … it’s not over yet, but it’s looking much better than it did.”
Looking back on his chairmanship during a tumultuous year, Davis said he remains deeply impressed by the overall unity among EEI’s members on public policy issues amidst so much turbulence and adversity.
“While Enron took the headlines, the real story was that, despite the collapse of this major force in the energy world, our customers never felt a thing,” he said. “We were able to continue to provide reliable, affordable power without any hardships to our customers.”
He continued, “There was a time not too long ago, when I was skeptical about our unity in the face of impending competition and structural changes overtaking so many companies,” he said. “Today, I am impressed with this industry’s ability to join together to work on our common interests. Together, we are answering the question, ‘Is there life after Enron?’ and I think the answer is a hardy ‘Yes, there is.'”
Edison Electric Institute (EEI) is the association of U.S. shareholder-owned electric companies, international affiliates and industry associates worldwide. Our U.S. members serve roughly 90 percent of the ultimate customers in the shareholder-owned segment of the industry, nearly 70 percent of all electric utility ultimate customers in the nation, and generate nearly 70 percent of the electricity produced in the United States.