Saying the move was part of an effort to make Illinois` largest utility more responsive to customer needs, Commonwealth Edison Co. announced Wednesday that Samuel K. Skinner will become its president after he steps down Jan. 31 as chairman of the Republican National Committee.
Edison Chairman James J. O`Connor, who introduced Skinner here as a friend of 20 years and a proven leader, said Skinner will be responsible for the company`s legal and regulatory functions, a disaster area for the company in recent years. O`Connor pointed to Skinner`s record as President Bush`s secretary of transportation, leading a federal agency with more than 100,000 employees, as evidence of his expertise.
Edison has been in the throes of a major restructuring since July, both reducing its force of 20,000 employees and attempting to turn itself from an old-fashioned, monopolistic utility into what O`Connor has called an ”energy services company.” O`Connor said Skinner will be vital to that effort.
”The selection of Mr. Skinner signifies one more in a series of major steps our company has taken to try to have our company operate on the leading edge in our industry,” O`Connor said. ”Our industry is undergoing major change. We want to be ahead of that change just as much as we possibly can.
”To have someone of Sam Skinner`s talent, knowledge and credibility is a real plus.”
Patrick N. Giordano, an attorney for the City of Chicago, which has challenged Edison`s coal contracts, said: ”Maybe Mr. Skinner can help break the gridlock between Edison and its consumers, which has gone on even longer than the gridlock in Washington. I`m sure he`ll find it just as big a challenge as anything he has faced before.”
Consumer groups, which have waged a constant battle in the courts and before the Illinois Commerce Commission against Edison`s attempts to increase rates to pay for its nuclear expansion program, took a mixed view of Skinner`s appointment.
”Sam Skinner is obviously a very talented attorney and politician,”
said Howard A. Learner, general counsel of Business and Professional People for the Public Interest, a consumerist law firm that is one of Edison`s chief critics.
”But Edison`s current problems involve rate issues-how to treat the costs of its unneeded nuclear plants-electrical system reliability and the troubled operation of its nuclear plants. None of those are Skinner`s areas of expertise. One would hope he would be a quick study.”
Susan Stewart, executive director of the Citizens Utility Board consumer group, said, ”It`s kind of curious. It used to be that Jim O`Connor was the political guy over there and Bide Thomas had the knowledge of the business. It looks like we`re replacing a hands-on, nuts-and-bolts guy with another politician. But this one has Republican ties. O`Connor has ties to the Democrats` old-boy network.
”It seems they are perpetuating the process of trying to get what they can`t get through the traditional regulatory means through political means.” Skinner, fresh out of a series of very political jobs, acknowledged he had a ”very tough year” as White House chief of staff-a post from which he was ousted as Bush`s re-election effort began to falter-and said he was glad to be back in Chicago, where he has worked both as U.S. attorney and a lawyer, including one for Edison. He represented Edison on some matters as a senior partner for the law firm of Sidley & Austin.
”This is a great company; this corporation has a great reputation nationwide,” Skinner said. ”I am absolutely ecstatic about living in Chicago. It doesn`t get any better.”
Skinner, who will make $490,000 a year, replaces Bide L. Thomas, who announced in September that he would take early retirement at the end of the year as president and chief operating officer as part of Edison`s restructuring. Thomas` functions as chief operating officer will be mostly taken over by O`Connor, who said there is no intention to name someone else to that particular post.
O`Connor will be responsible for operations, including finance, the commercial division, energy production and the quality improvement program.
Skinner was chosen after a national search by an outside consulting firm that involved many candidates, O`Connor said.
O`Connor, asked to speculate if Skinner might make a suitable successor to him, replied, ”Sure, absolutely. But he would be the first to tell you it`s not a slam dunk.” The two are nearly the same age-O`Connor is 55 and Skinner 54.
In a meeting with reporters after the news conference, Skinner indicated his highest priority will be to press for rate increases sufficient to meet Edison`s future capital spending needs.
He said he intends ”to make our case to the public, our customers and to the Commerce Commission that we need the rate increases we`ve sought.”
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He said Edison must have a ”fair rate of return” if it wishes to compete under the more open, less regulated circumstances dictated by national energy policy.
The commission is under an order from the state Supreme Court to decide by Jan. 11 a monumental rate case concerning Edison`s attempts to recoup a $7 billion investment in three nuclear reactors, one at Byron and the others at the Braidwood facility near Joliet. Consumer groups twice have won high court reversals of commission rulings granting Edison rate increases; the groups say the plants aren`t needed. Edison says it is entitled to the $750 million rate hike last approved by the commission.
Skinner is the latest in a long line of associates of former Gov. James Thompson who have had ties either to Edison, the state commerce commission, or both.
James Fletcher, Thompson`s first deputy governor and campaign manager, is a registered lobbyist for Edison; he works at Winston & Strawn, the Chicago-based law firm where Thompson has worked since leaving the governor`s office and where he will become chairman Jan. 1.
Two other Winston & Strawn lawyers with Thompson ties also have had Edison connections.
Michael Hasten, Thompson`s appointee to chair the commerce commission from 1979 to 1983, has done legal and consulting work for Edison since leaving the commission, most recently advising the utility on the renewal of its franchise agreement with the City of Chicago.
Dan Webb, a Thompson deputy who succeeded Skinner and Thompson as U.S. attorney in Chicago, also briefly did legal work for Edison in the mid-1980s. In addition, Philip O`Connor, whom Thompson appointed to follow Hasten as commerce commission chairman from 1983 to 1985, has done consulting work for Edison. After leaving the commission, O`Connor formed a private consulting firm, Palmer Bellevue Corp., with Gerald Benson, a former Edison regulatory affairs director.
Yet another Thompson protege, Terry Barnich, was chairman of the commission from 1989 to 1991 and remains a commission member. During Barnich`s tenure as chairman, the commission approved the largest utility rate increase in Illinois history for Edison-a $750 million, 14 percent rise in consumer bills that later was struck down by the Illinois Supreme Court.
The current commission chairman, Ellen Craig, is a former policy aide and former deputy chief of staff to Thompson. Craig is a registered Democrat who has taken consumerist positions on utility matters, including Edison`s pending request for a rate increase.
Skinner on Wednesday said he knew Craig and had worked with her in the past in an amicable fashion, but would not claim her as a close friend. Craig said that one of her first jobs was as an intern in the U.S. attorney`s office in 1976 after Skinner had succeeded Thompson as U.S. attorney.
Edison`s board, which approved the Skinner appointment, also voted Wednesday to continue the quarterly dividend at 40 cents a common share. The board three months ago reduced the dividend for the first time in more than a decade, to 40 cents from 75 cents a common share.
The board also approved Frank Olson, chairman and chief executive of the Hertz Corp., as a new member of the Edison board. O`Connor said Olson has displayed special ”people skills” during his career.