A mission to excel

In the current economic climate, reducing emissions and conserving energy is more vital than ever. Leading the way is Exelon, as Shelley Keller tells Frances Davies.

On meeting Shelley Keller, VP of Strategic Initiatives for Exelon, it’s obvious that taking on a challenge is something she welcomes. In her early career she worked as a registered nurse, before a 15-year spell spent working in consulting, then a giant leap to the power industry. Although this might not be the most natural career progression, a varied career can often provide a wealth of experience to tackle difficult situations.

Like many companies in the power and energy industry, Exelon has undergone a series of transitions from regulation to full competition, while dealing with the environmental issues that have come to the fore.

“Exelon has provided an extraordinary opportunity,” she says. “It’s a leading company operating in an industry undergoing very rapid change. For me, it was the chance to help find creative ways to deal with some of the complex and varied issues that the company and the industry were dealing with.”

Luckily, Keller’s consulting experience more than equipped her with a broad range of strategic and financial analytic skills. With these, she was able to learn about the business and its operations very quickly – an important factor when making the transition from consulting to an industry strategy position. She was able to take much of the experience gained working in a variety of industries around the world during her consulting days and apply it to parallel situations or circumstances in the energy industry.

In addition, her consulting experience supplied her with the ability to work across organizational lines, to draw together people from across the company, and use the power of analysis to help people work through situations to come to a common conclusion. “This ability to work with and across companies and use a set of influencing skills has been hugely important in my career at Exelon,” enthuses Keller. “It’s a really important foundation that builds a collaborative work style that is important to being successful in a strategy position.”

Simply the best
Standing out from the competition is something that Exelon prides itself on. It’s no surprise, therefore, that Business Week recently honored Exelon in its twelfth annual ‘50 Best Performers’ edition, ranking it the best performing electric utility company and the 22 nd best company overall in the United Sates. It is obvious that Keller is very proud of this honor and she keenly outlines some of the factors that contributed to the success: “Exelon has distinguished itself in a number of ways. First and foremost, is our record of operational excellence. We run the US’s largest fleet of nuclear power plants, as well as two delivery companies. We run our facilities safely and efficiently.”

Just as importantly, Exelon looks beyond its own interests towards that of the immediate community. This focus is largely on northern Illinois as well as southeastern Pennsylvania, Exelon’s two utility service territories. “We are very committed to the communities in which we operate,” says Keller.

The company has also demonstrated its commitment to exercising financial discipline. “One of the things that has proven very important, for our operations, our overall financial performance and our performance for shareholders in the last few years, has been our commitment to undertaking investments only after we have made a very rigorous assessment of the proposed investment and been very disciplined in the use of our financial resources,” explains Keller.

Cleaning up
Another worthwhile initiative Exelon has in place is Exelon 2020, which is the company’s commitment to environmental performance and to establishing its environmental leadership in an industry that plays an important role in environmental matters.

The company’s goal is to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020. As the architect behind the plan, Keller was determined to set as aggressive a goal as she thought could be achieved by the company. “2001 was the first full year of Exelon’s operations after this company was formed from the merger of its predecessor companies,” she recalls. “It was also the baseline year for our measurement of greenhouse gas emissions with the US EPA. We want to be as aggressive as possible and do everything we can to reduce emissions. The reality is we can and will reduce our own emissions. By doing so we will continue a path that we started on several years ago with the EPA to reduce our emissions by improving the efficiency of our buildings and reducing the energy consumption of our facilities.”

One way the company has been achieving this is by reducing the emissions associated with its vehicle fleet, which include cars and trucks used in the operations of the business. It is also encouraging customers to be more proactive by implementing a series of energy efficiency programs in its delivery companies to help customers both become more aware of their energy consumption and look for ways in which they can reduce it.

“We can help customers by offering more energy efficiency programs and by helping them understand how they are consuming energy,” Keller highlights. “Then we provide them with some of the tools to better manage their energy consumption, whether it is real-time pricing programs or smart metering – the kinds of things that give them more information and better tools.”

Along with these measures, the company is also offering more green products and services for residential and commercial customers.

Burning issues
Climate change is a massive topic at the moment, with both presidential candidates supporting some form of cap-and-trade initiative. With this in mind, it is interesting to gain some insight from Keller about the company’s viewpoint in this debate and what actions they would like to see the new president and Congress take to tackle this major issue.

“Comprehensive climate change legislation is absolutely essential,” she advises. “We have, for a number of years, supported an economy-wide cap-and-trade system, which is what both candidates support at this stage of the game. This is probably the most effective approach to achieving greenhouse gas reductions. We are actively involved in trying to shape the legislation in a way that we think will benefit customers in the end, and we’re very encouraged. Hopefully, very soon in the next president’s administration we will have climate change legislation.”

Keller was hopeful that this legislation might actually be passed at some point this year. But it has not been. Undeterred, Exelon is determined to move ahead with its own program in order to advance its own efforts on greenhouse gas reduction.

According to Keller, renewable energy is going to play an important part of the energy mix in the future, although she is mindful that renewables alone are not going to solve the problem. For one, renewables are an expensive form of generation, while the consistency of sources such as wind is also a concern. In the future, it is hoped that the price of technologies will decrease enough to reach the same kind of level as traditional forms of generation.

Exelon’s long-term aim is to focus on offering low-carbon sources of energy. Some of this would come from renewables and, potentially, from building new low-carbon plants. “We’re looking at a couple of opportunities to build new state-of-the-art natural gas combined cycle units – one on the East Coast of the US and one in Texas,” she explains. “If you combine our efforts to reduce our own emissions, our efforts to help our customers reduce theirs, and our efforts to offer more low-carbon supply in the marketplace, which will reduce emissions in the markets in which we operate, we think we are having the maximum amount of impact possible.”

Exelon is the first US-based utility to take part in the Carbon Disclosure Project’s Supply Chain Leadership Collaboration, in order to measure the greenhouse gas emissions of the company and suppliers. The company sees its efforts with the supply chain as a logical extension of its own efforts to reduce greenhouse gas emissions internally. It has been looking at what other companies, in other industries, have been doing to reduce emissions coming out of their supply chain. Keller cites Wal-Mart as a leader on this front.

“We saw the collaboration as an opportunity for us to get out ahead with these supply chain issues and begin to deal with them in a very serious way,” she informs. “The Carbon Disclosure Project was really the start of that effort. Exelon also is a founding member of an industry alliance to help set criteria to promote green procurement. We see this as an important initiative going forward, one we hope will have very meaningful contribution to reducing greenhouse gas emissions.”

Clean, green nuclear
The company’s well-run, emission-free nuclear power generation facilities have been cited as part of the reason for the growth in revenues last year for Exelon. In fact, it is the largest nuclear operator in the US and very much a nuclear-based generating company. Nuclear provides the vast majority of the megawatt hours of power that the company generates.

“Running those plants well has been key to our overall financial success in recent years,” Keller says. “We see new nuclear generation as absolutely essential to our country’s, and frankly the world’s, ability to have a meaningful impact on greenhouse gas emissions. It provides low-carbon, or virtually no-carbon generation. It’s really extraordinary. It’s the only base-load energy source that’s emission-free, and from our point of view, it’s safe, it’s clean and it would be tremendous if we were in a position to expand nuclear power in this country.”

Keller recognizes that the expansion of nuclear in the US is going be a challenge. Historically, many people have been opposed to it and for progress to be made, the country needs to come to review its view of the role of nuclear in a low-carbon world.

Information is a key factor in helping to promote this change. As prices rise and interest in sustainable energy sources increases, customers are demanding more information about the services utilities provide. Luckily, the company is aware about how vital it is that customers are provided with tools to increase their understanding. As Keller explains, historically, most people really didn’t have a good understanding of their electricity consumption – what they consumed and how they consumed it.

“We see the provision of those kind of tools and information as absolutely essential, because in the end customers have to make wise energy choices. We can’t force them to do things. The implementation of smart meters and real-time pricing programs will be an important piece of that puzzle as we look ahead. We are also investing in more education in our communities just to help broaden people’s awareness of how they can manage their energy consumption as wisely as possible.”

Looking ahead
Companies throughout the power and energy sector are grappling with the same kinds of challenges experienced by Exelon when putting together and developing their strategic plans. For instance, how should a company operate in a carbon-constrained economy going forward? How can they help reduce greenhouse gas emissions, and do so as economically as possible? Keller says that many people are deluded into believing that reducing greenhouse gas emissions is going to be easy, but that’s not realistic.

“Part of our challenge is to figure out how to get the most bang for our investment in terms of greenhouse gas reduction. The program that we’ve put in place for Exelon is based on a pretty thorough economic analysis of the opportunities we see before us in the markets in which we operate. We need to do the most cost-effective ones first and try to get as many reductions as possible, spending as little as possible, while acknowledging that in the end it’s going to cost money.

“The components of our plan and the way we’ve thought about it means that other companies aren’t going to be able to replicate it. It really reflects our base of business and our opportunity set. However, there are pieces of it that others can apply to their circumstances and hopefully come up with plans that make sense for them to pursue.

“It’s going to be a challenge to get to the kinds of greenhouse gas reductions that we all know we need to get to. We tried to stake out a plan to be as aggressive as possible with this goal of reducing, offsetting or displacing more than 15 million metric tons of emissions, and we hope others will be able to develop plans that push them as hard as we think this one is pushing us.”

Shelley S. Keller is vice president of strategic initiatives at Exelon. She was central in the development of Exelon 2020: A Low-Carbon Roadmap, Exelon’s plan to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020.