Samuel K. Skinner, president of Commonwealth Edison Co. and parent Unicom Corp., said Tuesday he’s bowing out, leaving the Midwest’s biggest utility to find an entirely new team of senior managers only months before it embarks into the uncertain marketplace of open competition.
In announcing his departure, Skinner confirmed that he had ceased being even a dark-horse contender to succeed James J. O’Connor, Unicom’s longtime chairman and chief executive, who announced last fall his own plans to retire once a successor was found.
Skinner, 59, said the board’s vision of the CEO job left its search committee no choice but to pass him over and look outside for the job.
The board is insisting that Unicom’s chief executive be on the job for at least the next 10 years, to see the company through the phased-in deregulation of the state’s electricity market enacted by the state last year. But the company has a mandatory retirement age of 65, so Skinner would have to step aside too early.
Skinner’s explanation suggests that the board may have forced O’Connor’s hand, too, in his retirement plans. He is 61.
“Obviously there was only one internal candidate, and that was me,” Skinner said. But he added: “They want a 10-year commitment, someone who can take us through the whole transition period. If neither Jim nor I can do that, they’re obviously going to go outside.”
Skinner and O’Connor are leaving a mixed legacy. On the one hand, they–particularly Skinner–were able to win passage of a state deregulation bill the company can live with. But on the other, the company enters a free market saddled with costly and controversial nuclear plants and no proven ability to thrive amid competition.
In fact, the company expects to take a charge against fourth-quarter 1997 earnings of at least $1.3 billion, largely stemming from plans to permanently close its Zion nuclear plants.
Skinner said he’ll stay at Edison just long enough to see the next chairman settled. “It’ll be a short period of time, just to be sure that a new CEO comes in, and there’s an orderly transition. We’re talking about a period of months, maybe weeks. I want to be sure the transition is orderly and the handoff is smooth.”
Officially, there is no word on the status of the search for O’Connor’s successor. Skinner said it is the board’s top priority, and insiders have said the search committee hopes it can resolve the issue within the next six weeks or so.
With the upcoming departure of both Skinner and O’Connor, the top three men at Unicom will have left the company in a year. Last July, Vice Chairman Leo Mullin quit to become chief executive of Delta Air Lines Inc.
Unicom’s choices for its top posts will have to hit the ground running. The Illinois law that will slowly open the state’s electricity market kicks in this summer. Edison is at a disadvantage because it has among the highest rates in the country, making its customers prey to lower-cost producers from elsewhere.
A major culprit in those high rates is Edison’s dependence on its six nuclear plants, which are relatively expensive to operate. More significant, half of the plants–or six of its 12 nuclear reactors–are on the Nuclear Regulatory Commission’s watch list because of safety concerns.
Last week, Edison said that its shuttered nuclear plant in north suburban Zion will stay closed permanently. The next chairman and president will have to decide whether shutting Zion is just a start of a nuclear downsizing, as Wall Street hopes, or if the company will keep the other five twin-unit plants running.
In addition, the new management won’t be running just a utility. In anticipation of deregulation, Unicom has launched several new enterprises in the past year–and they are not regulated like traditional utilities. Unicom formed a joint venture with AlliedSignal Corp. to build and market stand-alone power generators that would bypass the local utility. It also is in a joint venture with Sonat Inc. to market natural gas throughout the Midwest. Other new ventures offer a variety of services, such as helping business customers find ways to cut energy uses.
The managers are going to have to handle all of these ventures at once, and they will have to be adroit in marketing a company with a history of a government-protected monopoly.
As Skinner put it, “This new person is going to have 10 years of a lot of excitement.”
When O’Connor said in October he would retire as soon as a successor could be found, the board asked Skinner to submit his name as a candidate. That was widely considered little more than a polite public show; had Skinner been a true contender, the board would simply have named him CEO then, according to conventional wisdom.
Skinner said his departure won’t leave the utility in a lurch.
In fact, he said he had warned the board he likely would not stay on when his five-year contract expires Jan. 31. “I indicated to them I probably was going to do something else,” he said.
Just what that “something else” is even Skinner doesn’t know yet. He said he’s on the prowl for “a challenge. I think that what I will do is begin to focus on something that brings real value to an organization or to an effort I will really enjoy. It will probably involve solving some problems. I think my management skills have been honed even more here at Commonwealth Edison. I’m wide open.”
