Exelon CEO: Deal with emissions now

Exelon CEO: Deal with emissions now

CHICAGO - Jan 25 - USA TODAY

John Rowe has little to be down about.

He's CEO of one of the nation's largest and most profitable utilities, Exelon, which runs the nation's largest fleet of nuclear power-generating plants.

He's the industry's longest-serving CEO and is so dialed in that the Obama administration tapped him to lobby lawmakers on legislation aimed at reducing greenhouse gas emissions. Rowe has amassed a personal fortune that has enabled him to give millions, including donations to an inner-city school here that bears his name and educates students that he references by name.

But ask Rowe whether Congress will pass legislation to cut carbon emissions of big polluters, such as utilities, and he says, "I'm very depressed."

The legislation, in limbo while Congress tackles health care and financial overhauls, has been "sandbagged by partisan rancor," Rowe says. He gives it a much slimmer chance of passing this year than he had thought.

Yet Rowe says Exelon, the company created out of a merger a decade ago, will ultimately prevail because its nuclear energy is far cleaner than coal, which provides 56% of the USA's electricity.

The carbon legislation will come back, Rowe says, because climate change concerns won't end. Meanwhile, the Environmental Protection Agency is preparing to regulate carbon emissions of power plants and others.

Either way, Rowe says, costs to run coal plants go up. That drives energy prices higher, benefiting Exelon, since 92% of its power comes from low carbon-emitting nuclear plants that won't suffer the same higher costs as coal plants.

"Exelon wins sooner or later," Rowe says. "It may just be after I retire," at the end of 2012.

Rowe, 64, looks the part of the industry statesman that colleagues say he's become. His gray hair is close clipped. He dresses in a suit and tie with French cuffs. He keeps an Egyptian coffin, "not quite museum quality," he says, in his office, which is lined with hundreds of books, many historical.

A History of Wales runs 1,700 pages. Has he read it? "I'm Welsh," he answers.

Rowe's father wanted one of his three sons to assume his Wisconsin farm. But Rowe was clumsy and asthmatic as a child; his parents knew he was college bound, in part, because he was so bad at farm work, Rowe says.

Rowe's mother, a former teacher, checked out library books. Rowe read them all. He still reads two or three at a time. Rowe plucks a favorite from his office shelf, the Pulitzer Prize-winning Banks and Politics in America, written by Bray Hammond a half-century ago. Last year, Rowe gave a copy to a legislator on the House Committee on Financial Services. "I doubt they ever read it," he grumbles.

Such subtle power of suggestion has served Rowe well in the circles in which he travels in the energy sector and on Capitol Hill, colleagues say.

Speaking out, finding listeners

At times, Rowe looks so disengaged in meetings that "you wonder if he's listening," says Jason Grumet, an energy adviser to the Obama campaign and president of the Bipartisan Policy Center, a Washington think tank. "He'll sit back and not say anything for 45 minutes ... but when he does, everyone leans on their elbows to hear what he has to say," Grumet says.

Rowe has been speaking a lot lately on carbon legislation.

Twice in the past year, he testified on it before congressional committees. In September, Exelon created a stir by saying it would leave the U.S. Chamber of Commerce because of what Rowe called the group's "stridency against carbon legislation."

On climate change, "John's been the single most important figure in the utility industry," says energy expert Ralph Cavanagh of the Natural Resources Defense Council advocacy group. "He's figured out that business interests and environmental issues are inseparable."

In 2008, Exelon said it would reduce, offset or displace its entire carbon footprint by 2020. So far, it's cut emissions equal to those from more than a million cars, it says.

"Rowe isn't a Johnny-come-lately to the climate debate," says Howard Learner, executive director of the advocacy Environmental Law & Policy Center. But neither is Rowe an activist CEO, Learner says. "John is focused on the green, namely, profitability for shareholders, as well as on the green for the environment," Learner says.

Careful with money

On carbon emissions, Rowe fixates on the need to fix the problem now or pay more later. "The longer we put it off, the more expensive it gets," Rowe says. While some say the U.S. needs to expand its nuclear fleet to substantially cut carbon emissions, Rowe says new nuclear plants are currently too expensive to build to compete with cheap natural gas. Instead, Exelon is adding capacity to existing plants.

"My dad felt about cows the way I feel about nuclear plants," Rowe says. "They're a business, not a passion."

Rowe got a strong parental message about money, too: Be careful. He picked mustard weeds from fields for pennies a weed. "You could buy a new baseball glove ... but you'd better have put money in the bank, too," Rowe says.

Rowe's taken the same approach to Exelon's finances. Last year, he abandoned a $7.5 billion bid to buy NRG Energy, to create the nation's largest power-generation company, after a sweetened bid failed. On acquisitions, he compares Exelon to hyenas. "We're constantly looking for something dead in the plains."

Exelon was made by the merger of Unicom, the owner of the electric company serving Chicago, and Philadelphia-based Peco Energy. As CEO of Unicom, Rowe sold the company's coal plants and bet its future on nuclear, even though the fleet was a "disgrace," at the time, Rowe says.

In 2008, Exelon's 17 nuclear reactors, located in Illinois, Pennsylvania and New Jersey, ran at 93.9% capacity, it says, vs. 91.5% for the industry average. Hugh Wynne, analyst for Bernstein Research, says Exelon is one of the industry's most profitable players. "They're just the best nuclear operators in the business," Wynne says.