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Friday, August 18, 2006 3:45 PM ET

Amin Bishara, vice president, North America utilities

business development leader at Capgemini
By Jennifer Zajac

Amin Bishara, vice president and North America utilities business development leader for Capgemini, has more than 29
years of executive and management experience in the energy industry. Based in Dallas, Bishara has played a significant
role in establishing and expanding Capgemini's relationships with companies in the generation, transmission and
distribution sectors. For these and other companies, he has provided his expertise in shared services, change
management, international project development and business startup, as well as product development.

Bishara spoke with SNL Energy on Aug. 16 to discuss the M&A scene a year after the repeal of the Public Utility Holding
Company Act; the outlook on the pace of consolidation in the utility industry going forward; and what is driving whole-
company and asset generation sales. An edited transcript of that conversation follows.

SNL Energy: It has been a year since [the Public Utility Holding Company Act] was repealed as part of the Energy
Policy Act of 2005. How has that impacted the utility sector, in your view?

Amin Bishara: I think that PUHCA repeal was very helpful as far as the potential FPL Group Inc./Constellation Energy
Group Inc. [deal]. Without the repeal, that deal would not be possible. The same thing is expediting National Grid plc with
KeySpan Corp. I expect to see more of that moving forward.

What are some lessons learned thus far from the FPL Group/Constellation transaction?

Basically, Constellation Energy talks about all the synergies that will be accomplished as a result of the merger with FPL
[Group]. However, they are asking for a rate increase. I think it has been more political than anything else from the local
communities to say, "Why don't you give us some synergies rather than asking for a rate increase?". … But I think that it can
be sorted out sometime in the near future by Constellation. … In business, you can never overlook the political drivers of any
deal, no matter where you're at, or the ability for executives to foresee that and expect that. They can have it built into their
risk profile, as well as the time required to complete the acquisition, to enhance their successes rather than being hampered
later on and delay the deals. Politics is here to stay, so you have to work with it.

I hear that a lot of companies are gun shy right now because of the political challenges.

By acquiring the right skills, by being more engaged in the community, by making sure you cover your tracks as far as the
stakeholders and covering their needs, I think all those different things will help [utility executives] navigate the whole
process.

It has been a year since the Energy Policy Act of 2005 was signed. How has that impacted the industry?

I think it's going to speed up the consolidation process between utilities; it's going to create more demand for utilities to seek
FERC return on capital, which is higher than the individual state returns on capital, and also it's going to speed up the need
for more cash to spend on the improvement of the infrastructure that's called for in the Energy Act.

Can you quantify what you mean by speed up? As you know, the industry saw a lot of consolidation in this industry
in the 1990s. Are we going to see that kind of pace?

I would say even more [consolidation]. In the 90s, we had some consolidation that was prompted primarily by major
acquisitions across the Atlantic or across different continents, so we had many companies growing either in Europe or in
Latin America, etc. This [wave] is going to be focused primarily on inside the U.S.A. One of the requirements [of the Energy
Policy Act] is to improve the overall grid reliability; well, that requires a huge investment. Therefore, companies loaded with
debt will have difficulties raising more money to spend on these improvements. So the need for equity investors or the need
for other companies to acquire them and the need for healthier companies in the market is greater than ever.

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Tell me more about these buyers that have the ability to come in and make these acquisitions. Who are they?

They are the ones with the lowest cost of capital who [have] the ability to accrue more debt either by acquiring or building
more infrastructure.

So are these American utilities, foreign utilities, private equity buyers … ?

I would say it's a combination of certain utility companies and certain private equity/investment funds. I see companies as
healthy as Sempra Energy, Exelon Corp., TXU Corp., Pacific Gas and Electric Co., etc. I would say about 20 to 25 good,
healthy companies. I also see strategic infrastructure investments funds and private equity funds, such as Macquarie Bank
Ltd., which, for instance, proved that they are more strategic than the ones that just acquire and flip an asset a year later.

What else is driving whole-company transactions right now?

The need to raise money to invest in the infrastructure, especially decayed infrastructure; the need to raise capital to grow
the business and if you are loaded with debt, your effort will be hampered, so you're going to be acquired. That leads to the
stronger utilities to expand in other territories to gain access to FERC return rather than just a limited, state-by-state return.

I have heard that there are not that many companies poised right now to have a national presence in the United
States. Do you agree?

Right now, we don't see as many because you're going to see consolidation in given regions first, then they go across the
regions. But the overall need, especially in the infrastructure business, to go beyond the region is greater than ever as a
result of the Energy Policy Act that just passed last year.

Do you have any other comments about whole-company transactions?

I see whole-company transactions happening, but on a lot smaller scale than the individual, generation-only acquisition or
infrastructure-only acquisition, because you have to have a strategy. The overall strategy of a vertically integrated company
may no longer be what the market will be asking for moving forward. Developing your three-to-five-year strategy about
where you're going as far as whether you're going to be an energy-focused company, an infrastructure-focused type
company, or whatever you're going to be will help attract the right partner or the right investment firm that you need to have
to raise the money to perform what you want to do.

Shifting gears a bit, talk about generation asset sales: What is driving those right now?

If you look at the overall demand for the entire energy business, it is growing faster than ever. And, if you look at this
summer and all the heat waves that we're having all over the country, there are some markets, like the PJM, California ISO
and to some extent ERCOT, where the demand exceeded the capacity available in that market. So, there is a tremendous
demand being built up, which is due to economic regions and not building enough generation in the last five to 10 years.
Therefore, there is more need to acquire generation assets.

Are you seeing any particular differences in asset sales when it comes to coal, gas and other generation assets?

I see some movement in the gas side of the business. The reason to consolidate is to create a larger, more efficient
operation, especially with the fluctuation in gas prices nowadays. I also see consolidation in the infrastructure business.

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