Accenture’s Etienne H. Deffarges on Thursday borrowed a quotation attributed to Winston Churchill, telling energy executives that the definition of “failure” was the “ability to go from one failure to another with enthusiasm.” Churchill’s comment, said Deffarges, “spectacularly” defines what has happened and what will happen as the power sector begins its slow ascent.

Although Deffarges’ comments elicited laughter from a crowded audience at CERAWeek 2003 in Houston, he offered a more serious warning of what’s ahead for the beleaguered power sector. “The market will demand proven ability,” he said. “We’re not out of the trough yet. There will be several more years of troubling news, and the next two years will be challenging in the United States.”

Deffarges noted that since the fallout in wholesale energy, today there are “few leaders in the energy power sector.” Of those still on their feet and performing above the fray, Deffarges included Sempra Energy, Cinergy, Dominion, Ameren, KeySpan and Southern Co. However, with few winners, a lack of investor confidence and politicians demanding reform, it has become difficult to “maintain our enthusiasm.”

However, Deffarges, who is managing partner for Accenture’s Global Utilities unit, said the “intellectual ideas” that fuel the growth of any industry have to continue, even if some “failed spectacularly,” like “asset light” — a term driven into the ground by Enron Corp.

“We’ve learned that we must be asset intensive to maintain as the business goes from cycle to cycle,” he said. And, Deffarges offered that power players will need to choose which type of asset-intensive company they want be: more like ExxonMobil Corp., which has a global view, or more like Southwest Airlines, which succeeds with a regional asset approach.

“Companies will have to develop a well balanced portfolio to protect themselves in downturns,” Deffarges said. “And they must remember that a downturn last two times longer than the upturn,” meaning that the current decline could last as long as six to eight years — similar to other executives’ beliefs at CERAWeek.

“If a company is merely going to survive, they are not going to make it,” he said. “You have to make it semi profitably,” which includes “excellent asset management, excellent leadership, tight controls and an emphasis on risk management.”

Deffarges predicts that “a half dozen global winners will emerge” from the current struggle, while another “half dozen more regional winners” will succeed. Globally, he believes European-based utilities are more able to succeed, while in North America, it will be regionally based companies doing better.

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