Corporate Accountability: Utilities Take Stock

The real, painful reform has only just begun.

It has been almost a year since Enron imploded into bankruptcy, but rather than solve problems, the event has only brought uncertainty-credit rating downgrades, a drop in investor confidence, and heightened scrutiny from the Congress, the Securities and Exchange Commission (SEC), the Federal Energy Regulatory Commission (FERC), and the Commodity Futures Trading Commission (CFTC). Many utility stock indices (composed of regulated and unregulated companies) have hit all-time lows over the past several months.

Some measures, including a more vigorous enforcement of securities laws, could well ease investor worries. As Erroll Davis, chairman, president, and CEO of Alliant Energy, says, "To the extent the reforms provide investors with more information, I think they'll feel better."

Nevertheless, the SEC created an uproar when it listed Enron and Dynegy, in particular, among eleven companies that failed to certify their most recent financial statements under the newly enacted Sarbanes-Oxley Act, which required top corporate executives to certify information contained in quarterly and annual reports.

Dynegy spokesman John Sousa took the heat for his company's no-show. As he put it, Dynegy instead had chosen to file documents explaining why its interim CEO, Dan Dienstbier, (who recently replaced CEO Chuck Watson), and then-CFO, Louis Dorey, were each unable to validate the financial statements. Sousa laid the blame on pending restatements of Dynegy's 2001 financial results and the re-audits of the company's 1999, 2000, and 2001 financial statements. Sousa said he expects PricewaterhouseCoopers to complete its re-audit by year-end. At that time, he promised, Dynegy's leadership would certify the prior statements.