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Nuclear spotlight on Exelon executive: In his first lead role on a turnaround, Crane carries heavy load in making megamerger work

By Steve Daniels, January 09, 2005

A lot is riding on the Exelon Corp. executive's performance. The success of Exelon's planned $13-billion acquisition of Public Service Enterprise Group Inc. hinges in large part on Mr. Crane's ability to whip the New Jersey utility's nuclear power plants into shape. He helped Mr. Kingsley pull off a similar feat at Exelon subsidiary Commonwealth Edison Co. This time he's in charge.

"It's an awesome responsibility," says Mr. Crane, 46, who was named chief nuclear officer at Exelon a year ago. "I've done a lot of (turnaround) work as a No. 2 or No. 3. This is the first time I'll be doing it on my own."

The Public Service Enterprise Group deal, announced late last year and expected to close late in 2005 or early in 2006, would make Chicago-based Exelon the largest electric utility in the U.S. Mr. Crane will play a big part in making the merger pay off for shareholders.

Exelon is counting on improved performance at Public Service Enterprise Group's three nuclear power plants to boost profit at the merged company by $60 million to $75 million annually. That's more than half the $117 million, or 12 cents per share, analysts expect the deal to add to Exelon's annual per-share earnings by 2006.

Mr. Kingsley, 62, who retired as Exelon's chief operating officer two months ago, says his apprentice of the last six years will deliver.

"I know he will do very well," Mr. Kingsley says of his prot�g�. "But he's got to prove himself."

BETTER WITH PEOPLE

Mr. Crane, a 25-year utility industry veteran, differs from his former boss in many respects. He's an electrical engineer from New England, and more approachable than Mr. Kingsley, a blustery former Navy submarine officer from Alabama. Where Mr. Kingsley was confrontational and demanding, Mr. Crane is understated and collaborative.

"Oliver's more 'damn the torpedoes, full speed ahead,' " says Robert Joyce, who heads Local 15 of the International Brotherhood of Electrical Workers, the union representing Exelon workers in Illinois. "Chris is a more reasonable person." Mr. Joyce says Mr. Crane recently agreed to hire a handful of new workers, something never done in the cost-cutting Kingsley years.

"He's like me with discipline and rigor," Mr. Kingsley allows. "He's more skilled in being able to communicate and explain. His style wears a little bit better."

Those traits are likely to come in handy at Public Service Enterprise Group, where Mr. Crane must radically change the culture at its nuclear plants, says Corbin A. McNeill Jr., former co-CEO of Exelon and an industry veteran who worked for Public Service Enterprise Group's nuclear unit in the 1980s.

"The issue has gone on so long that it's fairly similar to the Commonwealth Edison problems of the late '80s and mid-'90s," Mr. McNeill says. "It's (a culture) where there is job entitlement, long-term security, little demand for real strong performance and protection of management and labor that didn't really perform."

PLANTS UNDER HIGHER SCRUTINY

A Nuclear Regulatory Commission spokesman concurs. "One of their pers istent problems is they would come up with plans for addressing their issues and never follow through on them," he says. The commission last year placed Public Service Enterprise Group's plants under a higher level of regulatory scrutiny because of concerns that workers there feared reprisals if they raised safety issues.

A Public Service Enterprise Group spokesman defends the company's nuclear performance, saying "we have never in our entire history compromised safety and we never will. Even the best among us strive to be better. We look forward to our new partnership."

Mr. Crane fixed similar problems at ComEd, where he oversaw recruiting and training at the company's troubled nuclear plants. He and Mr. Kingsley boosted output at the plants from about 50% of their generating capacity to 93% today.

"The two primary issues you'll find (in an underperforming nuclear operation) is poor direction and a poor accountability model," he says. "In my experience, including Commonwealth Edison, the majority of people want to do the right thing."

Mr. Crane's primary office is in Warrenville, but he expects to spend a lot of time in New Jersey over the next two years. That's how long he figures it will take to raise output at the Public Service Enterprise Group plants from their current 82% of capacity to the 90%-plus level Exelon has reached.