John W. Rowe

October 1 1992 by Peter Lacey


In an age of complex, burgeoning environmental regulation, how to be clean and cost-effective? For John W. Rowe. president and CEO of New England Electric System (NEES), one answer is NEESPLAN 3, a program to reduce air emissions while increasing power production and keeping rate hikes in line with inflation.

Unlike some of its more nuclear-powered competitors, NEES relies heavily on dirtier oil and coal-burning generators. But under NEESPLAN 3, it will switch to fossil fuels with a lower sulfur content, install nitrogen-reducing equipment, and convert its oil-fired Manchester Street Station (Providence, RI) to natural gas. In addition, the holding company will purchase more electricity from other utilities. Overall, the plan is projected to cut emissions 45 percent and boost power production 15 percent.

“How does one be environmentally and socially progressive while still keeping competitive commodity prices?” Rowe asks. “That’s a basic question for our industry.”

The subsidiaries of Westborough, MA-based NEES supply power to more than 1.25 million customers in Massachusetts, Rhode Island, and New Hampshire. With 1991 revenues of $2.1 billion, NEES ranked second in New England behind Northeast Utilities ($2.69 billion). Earnings last year plunged 31.3 percent to $180 million, partly because Hurricane Bob devastated NEES’ market last August. One-third of the utility’s customers were left without power, and NEES was forced to replace hundreds of utility poles and thousands of miles of wire.

Nevertheless, with an average return on equity of 12.8 percent over the last five years, NEES nosed out Northeast (11.8 percent). “We’re a very return-on-equity-driven company,” Rowe says. Profits for the second quarter ended June 30 jumped 56 percent to $30.2 million.

Like a number of other prominent electric utility CEOs, Rowe, 47, is a lawyer by training. “It’s logical for a lawyer to get involved with the industry at this stage,” he observes. “Economy of scale is no longer the silver bullet-most of the problems are public-policy-driven.” After receiving his law degree from the University of Wisconsin, Rowe joined Chicago‘s venerable Isham, Lincoln & Beale, where he became a partner in 1978. Legal work on the reorganization of the troubled Chicago, Milwaukee, St. Paul & Pacific Railroad-which eventually brought a big return to the railroad’s stockholders-piqued his interest in a corporate career.

Following a stint at Conrail, Rowe signed on in 1984 as CEO of troubled Central Maine Power, which had a ruinous investment in the canceled Seabrook nuclear power plant. He moved on in 1989, when NEES offered him its presidency.

“My biggest challenge at NEES,” says Rowe, “is to teach a successful organization that it has to keep evolving just to survive, let alone get better.”