Draper, E. Linn Jr. 1942–
E. Linn Draper Jr.
Former chairman, chief executive officer, and president, American Electric Power Company
Education: Rice University, BA, 1964; BS, 1965; Cornell University, PhD, 1970.
Family: Son of Ernest Linn Draper and Marcia L. Saylor; married Mary Deborah Doyle, 1962; children: four.
Career: University of Texas, 1970–1979, faculty; Gulf States Utilities, 1979–1987, nuclear technician, then senior management; 1987–1992, CEO and president; American Electric Power Company, 1992, president and COO; 1993–2003, chairman, CEO, and president; 2004, chairman.
Awards: Individual Leadership Award, Energy Daily, 1997; Distinguished Eagle Scout Award, Boy Scouts of America, 1998; Columbus Award, Greater Columbus Chamber of Commerce, 2002; Roy Family Award for Conservation, Harvard University John F. Kennedy School of Government, 2003.
■ E. Linn Draper Jr. became the president of American Electric Power (AEP), the electric-utility holding company headquartered in Columbus, Ohio, in March 1992. In April 1993 he was named chairman, president, and chief executive officer of AEP and all of its major subsidiaries, which positions he held until December 31, 2003. He continued to serve as chairman until his retirement in April 2004.
As the head of AEP Draper led the company through the uncertainties of several events: the deregulation that followed the 1992 Energy Policy Act; the Enron collapse of 2001, which shook the entire energy industry; and the largest blackout in North American history, which occurred on August 14, 2003. By 2002 AEP was America's largest electricity generator—with more than 22,000 U.S. employees—and a world energy leader with operations in Europe and 7.3 million customers worldwide. The company ranked thirty-fifth on BusinessWeek 's 2002 list of the 50 top-performing companies. In May 2003 Public Utilities Fortnightly recognized Draper as one of the five best power-industry CEOs "for his leadership in restoring the reputation of a great utility name" (May 14, 2003).
EARLY CAREER HIGHLIGHTS
Draper began his career as a faculty member at the University of Texas, where he taught until 1979. During his time there Draper at one point served as the director of the Nuclear Engineering Program. Between 1979 and 1992 he was employed by Gulf State Utilities, continually moving into positions of increasing responsibility. He started out as a nuclear technician and by the mid-1980s held senior management positions. Between 1987 and 1992 Draper served as the president and chief executive officer of Gulf States Utilities.
Draper joined American Electric Power as president and chief operating officer in 1992. In 1993 he was appointed chairman, president, and chief executive officer of the company.
By 1997 AEP served in excess of three million customers in Ohio, Virginia, West Virginia, Indiana, Kentucky, Michigan, and Tennessee. The company owned all or a portion of 21 major generating plants, 19 of which were coal-fired, one a nuclear station, and one a pumped-storage hydroelectricity facility.
In response to external pressures Draper soon began realigning AEP's organization and cutting the workforce to adapt to an increasingly competitive marketplace. In anticipation of the onset of a radically different electric industry in which the generation, transmission, and sale of electric power could all potentially become separate businesses, he appointed individual presidents at the state levels. In preparation for the transition from public monopoly to mere player in the competitive marketplace, Draper determined that the company's core business should remain power generation. Although some of his decisions were viewed as aggressive and were unpopular among employees, Draper ensured that the financial security of the firm remained solid.
In late 1997 AEP acquired Central & South West Corporation, the Dallas, Texas–based public-utility holding company. According to Draper, the merger created a company that was "diverse in its fuel, its generation, and in the workplace—a link between the Midwest and Southwest, reaching from Canada to Mexico" (Brown, December 28, 1997). Following the acquisition AEP concentrated on wholesale customers—companies that purchased power for resale to residential an >commercial customers. Draper made clear that AEP had no plans to expand its distribution business and had no intentions of competing at the retail level. The separation of generation, transmission, and distribution assets was a key factor in preserving AEP's shareholder value during this period. Draper noted in the Stockholder's Letter 2000 Annual Report, "AEP is a utility that thinks like a growth company. This growth will come from our strengths in power generation and related wholesale marketing and energy trading."
INDUSTRY SHAKE-UP: THE ENRON COLLAPSE
By 2001 AEP rivaled the industry leader Enron in the volume of electricity and natural gas traded. The subsequent collapse of Enron shook confidence in AEP as well, but under Draper's leadership AEP management was able to reassure investors that its bookkeeping was credible and its balance sheet sound. Industry analysts reported that AEP could sustain a $50 million write-off, had recorded a net income of $971 million in 2001 on revenues of $61.2 billion, and carried debt with investment-grade ratings. In addition analysts predicted that with Enron out of the picture AEP would be able to garner a larger share of the wholesale energy market. As the largest producer of electricity in the United States, with a capacity of 38,000 megawatts, and as much more than a trading house, AEP was able to emerge unscathed by the exposures of accounting scandals and corporate malfeasance throughout the energy industry following the Enron meltdown.
In response to economic conditions and the pressures that resulted from operating in a restructured, competitive marketplace, AEP began downsizing its trading and wholesale-marketing operations, divesting itself of noncore assets, and cutting dividends in order to raise capital and shore up its balance sheet during 2002 and 2003. Following a credit-rating downgrade that was based on the company's risk profile, Draper refocused AEP on its core utility operations and made solid progress toward improved performance. By mid-2003 Draper was able to claim that AEP's ability to weather the economic downturns of 2001 and 2002 had been possible because the company "never left the basics. We stuck to our core strategy throughout the restructuring of our industry. We took a look at the restructured industry early on and decided where our expertise lay and recognized that we have been a distributor of electricity for many, many years" (Public Utilities Fortnightly, May 14, 2003).
On August 14, 2003, much of New York and the northeastern United States and southeastern Canada experienced the most widespread blackout in history. Testifying before the House Committee on Energy and Commerce less than three weeks following the power outage, Draper stated, "From the outset, let me be clear, we did it right. The AEP system held together—a point of pride for us" (September 4, 2003). AEP managed to isolate itself from the cascading blackout because, according to Draper, "our protective systems performed automatically, our operators performed and communicated as they should, and our load and generation remained in balance" (September 4, 2003).
By December 2003 many of the nation's largest electric utilities were experiencing major changes in leadership, and AEP would be no exception. Draper announced in April 2003 that he would step down as president and CEO at the end of the year. When asked how he would like to be remembered, Draper said that he hoped people would say that he left AEP "a strong company that was noted for providing reliable and affordable service to its customers. That it was an environmentally responsible entity, and that the employees, customers, and shareholders found AEP an attractive place to work, take electric service, and invest in" (Public Utilities Fortnightly, May 14, 2003).
PROFESSIONAL MEMBERSHIPS AND AFFILIATIONS
Draper was elected to membership in the National Academy of Engineering—one of the highest distinctions for a professional engineer—in 1992 for "significant contributions to nuclear-power development through research, engineering innovations, and overall management" (www.nae.edu Member Directory). In 1998 he was elected to the Cornell University Council Board and in 1999 was appointed to the University of Chicago Board of Governors for the Argonne National Laboratory. He was president of the American Nuclear Society and chairman of the Nuclear Energy Institute, the Institute of Nuclear Power Operations, the National Coal Council, and the Edison Electric Institute—the trade association of investor-owned electric utilities. He was a registered professional engineer in the state of Texas.
From 1984 to 1985 Draper served on a U.S. Department of Energy advisory panel charged with the study of the management of radioactive waste. He was appointed to the President's Council on Sustainable Development, a group comprised of government, business, labor, and environmental leaders assembled to recommend a national economic strategy for the protection of the environment. He served as chairman of the Electric Power Research Institute and of the Utility Nuclear Waste Management Group, a consortium of 43 electric utilities.
In 1999 Draper was elected to serve on the board of The Nature Conservancy, an international nonprofit organization that protected plants, animals, and natural communities by protecting the lands and waters that they need to survive. He also served on the board of the Ohio chapter of The Nature Conservancy.
While living and working in Columbus, Draper was involved in numerous community-service activities and organizations, including the Columbus Technology Leadership Council, the Ohio Business Roundtable, the Simon Kenton Council of the Boy Scouts of America—as president—and education-related causes such as Battelle for Kids and Education 2000. He served on the boards of Cellnet Data Systems, Borden Chemicals and Plastics, Sprint Corporation, and Temple-Inland.
See also entries on American Electric Power Company and Gulf States Utilities Company in International Directory of Company Histories.
sources for further information
"American Electric Power to Divest Utility End of Business," Fort Wayne (IN) News-Sentinel, October 31, 2000.
"The Best of the Best: Five Electric Utility Chiefs Are Showing True Leadership for Their Companies and for an Entire Industry," Public Utilities Fortnightly, May 14, 2003, p.28+, Richard Stavros, executive editor.
Brown, Wesley, "Diversity Seen in AEP-C&SW Utility Merger," Tulsa World, December 28, 1997.
"Chamber Honors Global Energy Leader Dr. E. Linn Draper Jr.," Greater Columbus Chamber of Commerce, February 20, 2002, http://www.columbus-chamber.org/newsroom/newsreleases/2002/pr020220a.html.
Draper, E. Linn, Jr., "Blackout 2003: How Did It Happen and Why?" witness testimony read before the House Committee on Energy and Commerce, September 4, 2003.
——, "Q&A with AEP's E. Linn Draper Jr.," BusinessWeek Online, March 25, 2002, http://www.businessweek.com/bw50/content/mar2002/a3776038.htm.
Martz, Michael, "American Electric Power Prepares for Competition with Restructuring," Richmond (VA) Times-Dispatch, August 14, 1995.
Reddy, Sudeep, "Energy Industry Changes Prompt CEO Searches," Knight Ridder/Tribune Business News, December 18, 2003.