CORBIN MCNEILL ON EXECUTING STRATEGY

Greg Cucci

President

PECO Energy Ventures

The transition of the company over the last 10 years has affected me and my job substantially. I`m an operator by background, so I`ve paid a lot of attention to performance improvement in operations. In the last four years, I`ve become much more focused on strategy and execution of strategy.

We`ve been able to develop a management team to whom we can delegate the operational responsibilities, and we`ve created a good performance management system. This has freed us up to the point that we have been able to execute on strategy, and at the same time continue to improve our operations.

The key is this: hire good people, make sure they`ve got the right parameters to operate in, let them go and make the decisions, and hold them accountable.

… On consumer choice

When a Pennsylvania family goes to Georgia to meet with their in-laws, they`ll talk about customer choice. The people in Georgia will wonder why they don`t have choice. It will bring up a lot of questions for people.

Consumer choice is a very attractive feature. People don`t like monopolies and lack of choice. Customer choice will be the selling point, and will settle the issue [of deregulation].

If a utility that is operating under a monopoly practice today adopts customer choice, but doesn`t change anything else about the way it operates, it will get higher customer satisfaction numbers. If the customer gives the utility low numbers, they`re criticizing themselves, so there will be the natural tendency to rate the utility higher.

… On convergence

We don`t have a lot of convergence resources. Since we have not generally been in the new fossil-fired development business, we have not had to rely on risk hedging with regard to gas supplies.

Frankly, as we`ve gone to the market place, we have yet to have our customers express a need for dual supply of gas and electric. We haven`t seen gas and electric convergence in the marketplace as much as we`ve seen media hype and some people`s strategy. That doesn`t mean it won`t come, but we haven`t seen it yet.

As we move into fossil generation with natural gas, we`ll have to take some different view, but I don`t know whether it will be a full convergence model.

… And on global markets

We have not gone international yet. We formed CanaGen, which mirrors AmerGen, and we`ll be considering the Ontario Hydro sales as they come up. Other than that, we have not made any direct overseas investments, and I don`t think Unicom has either.

We`ve got our hands full here, and we have not developed the expertise for international assets. That doesn`t mean we will not pursue them indirectly. If one of the fossil auctions that comes up, like Sithe Energies, includes a portfolio of international assets, they would be something we`d be interested in. We wouldn`t reject the whole asset structure just because it has international assets. But at this time we`re not looking to buy internationally.

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