Global Energy Strategies: excerpts from Bill Dahlberg`s remarks at Arthur Andersen`s 18th annual Energy Symposium in Houston
Here are excerpts of remarks made Dec. 10 by A.W. Dahlberg -- chairman, president and CEO of Southern Company -- at Arthur Andersen`s 18th annual Energy Symposium in Houston. Dahlberg -- along with Enron CEO Ken Lay -- was on a two-person panel discussing "Global Energy Strategies for the 21st Century."
I believe we will continue to move toward competition on a state-by-state basis for some period of time. That`s great for a company like mine because we`re in a low-cost region of the country, and we get the advantage of looking at what happens in California and New England and Pennsylvania and Illinois and picking the best system to employ in our states.
Quite frankly, there`s not a great push for competition in our region of the country for a couple of reasons. One, prices are low. Second, we think we`ve done a pretty good job of running our business.
I am strongly biased, but I believe that if Thomas Alva Edison came back from the dead and called Southern Company for electric service, he`d be pretty darn proud of what we have done with our business. He`d have low prices -- considerably less than the national average -- and he`d get service from us that we think is world-class.
But I`d tell Mr. Edison at the end of the phone call that we are going to do the best we can with the business we`ve got, but the fact is, Tom, things are changing. If you live here in the Southeast, we will end up with open markets at some time.
I`d say, Tom, we`ve decided we`re going to do some things about that. We have a couple of choices. We can stay here in the Southeast, open the markets and see our business shrink. Or, we can look at where markets are opening and explore some of those opportunities. I think there are two of them.
First, in this country, there are opportunities to expand. As policymakers have made decisions to open markets, we`ve tried to position our company to grow by building an energy trading and marketing company with sales offices scattered across the country.
Every utility that would tell you they are going to be in the energy trading and marketing business will tell you that their goal is to be in the top 10. Everyone understands that it`s a scale business and if you`re not in the top 10, you`re not going to succeed.
Second, although we are more familiar with the markets opening up here in the U.S., we see even greater opportunities for rapid growth internationally.
Asia is the area of the world that we think has the greatest opportunity, and it is the place where we have the biggest IPP business. We now have plants in the Philippines and mainland China, and we have opportunities in several other countries there. Despite the recent financial turmoil in Asia -- if you look at the demand for electricity -- I still think it holds the largest potential for growth for our company. There is no doubt in my mind that the market in Asia will continue to grow and those companies that have a good footprint there will have the opportunity to grow the fastest. We are trying to seize that opportunity. We think it is a great place to be.
We are faced with a little bit of a dilemma right now. Three years ago, because of what we saw happening in the markets, we decided that 30% of our income should come from businesses that did not exist at that time. We decided that, by 2003, 30% of our earnings should come from outside our core business in the Southeast.
With the projects we currently have in place, we will achieve the 30% before 2003. That`s a very short period of time for that kind of growth.
The question for us now -- and it`s a strategic question -- is: How fast and in which direction do we continue to grow, if at all? Do we now conserve some capital and think a little longer about what the markets will be like in this country? Or do we continue to invest where we see attractive opportunities internationally?
The opportunities are going to exist in both places and I don`t know yet which way we should go.
We have a global energy strategy that we have put it in place, and we have achieved the goals we set initially. But I think there are many more opportunities, and I think our company is prepared to explore those when we make a decision exactly how far and how fast to go.
There will be strong international competitors, and they will gain strength. If we lose some of our momentum, I fear we will be playing catch-up. So we have to make quick decisions but smart decisions. That`s what our company will attempt to do.
We must be a global company because not to do so would mean to stay in the Southeast and shrink the business. That`s not acceptable to us. The better strategy is to think globally, act smart, and build the business. And that`s what we intend to do.