Creating Energy

New Mexico Business Journal, August, 2001

New Mexico may be in a good place.

WE'VE ALWAYS KNOWN WE HAD MUCH more than our fair share of energy-producing natural resources-oil natural gas, coal, uranium-a very good reason why the state-operated funds, into which royalties and severance taxes go-are now among the world's largest. Despite the recent Wall Street vagaries.

But New Mexico could be considerably more than a vital source of raw materials, with an assist from the federal government and strong leadership in Santa Fe. We've gathered an impressive group of people to explain that in our special report on energy. They are:

* JEFF STERBA, the new president and chief executive of Pubic Service Company of New Mexico.

* BILL RICHARDSON, the Secretary of Energy in the Clinton Administration and likely Democratic candidate for governor next year.

* Senator JEFF BINGAMAN, the new chairman of the Senate Energy and Natural Resources Committee.

* Representative HEATHER WILSON, a prominent member of the House Energy and Commerce Committee.

* BOB GALLAGHER, the president of the New Mexico Oil and Gas Association.

What they have to say is, at least. enlightening and may well be prescient.

Jeffry E. Sterba is chairman, president and chief executive officer of the Public Service Company of New Mexico, having succeeded Ben Montoya last year. A tall, powerfully built man with an engaging smile and a ready laugh, Sterba has been a PNM employee for all of his career, with the exception of a couple of years (in 1999-200) as executive vice president of the United States Enrichment Corp. in virginia. His career at PNM spans more than 21 years. During that time, he served as executive vice president and chief operating officer, as a senior vice president, and in positions in the corporate development, bulk power and retail electric and water services area. He originally joined PNM as an intern in 1977.

During his tenure at PNM Sterba has been a leader in Albuquerque's business community. He was chairman of the Greater Albuquerque chamber of commerce and the Middle Rio Grande Business Education Compact. He Served on the boards of Quality New Mexico and First Security Bank of New Mexico. He is a strong supporter of current efforts to revitalize Albuquerque's downtown area. He currently serves on the Wells Fargo Board, the Edison Electric Institute Board and the UNM Foundation Board.

He is a summa cum laude economics graduate of Washington University and has done postgraduate work in economics at Washington and the University of New Mexico. We met with him in his top-floor office in the PNM building on Alvarado Square in Albuquerque.

Is New Mexico in the Catbird Seat?

PNM'S new boss speaks his mind on California, a national energy policy, the environment and the state's energy future.

How did you find yourself in this business?

I found myself in this business coming back from graduate school, and I just wanted to be in New Mexico for the summer. To make a long story short, I got a summer job with PNM. Twenty years later, I'm still here. I did leave the company for about two years.

Why was that?

There were really two reasons. One had to do with New Mexico. And one had to do with more personal issues. The New Mexico issue was, we had struggled for years with a [Public Utilities] Commission that I can only describe as dysfunctional, one that seemed intent on not allowing this company to be what it had the capabilities of being. It just reached the point of exasperation. Coupled with that, I had a very strong desire to personally develop a greater level of international business experience. I believe that the forces of globalization have a tremendous impact on businesses even if they are not in the global market. I always had a strong interest in the international side and so I went to an organization that afforded me to work in company with international business. So it was a combination of reasons.

But you were happy to return.

I'm very pleased. And I think I came back a bit of a different person as a result of the experience. Sometimes a respite is a good thing. And I have always believed in the power of this state and this company. It's a question of whether they can live up to that potential. I think they can. I came back pretty charged up. I saw a change, politically, organizationally and within the commission [now the Public Regulation Commission].

So you don't regard the PRC as dysfunctional.

Well, no. I think they are facing an enormous burden, a huge array of tasks with some highly complex issues. They have huge meal on their plate to digest.

Some years ago, I think it's fair to say that PNM was the company we loved to hate. But that changed. It could be it changed because US West became the company we loved to hate. Why do you suspect there was a change?

Even in the height of the anti-PNM attitude, most of our customers liked us as a service provider. They didn't necessarily like the rates, and they didn't trust us as a business. I think you'll find today that trust has dramatically increased for a couple of reasons. First, we returned to the root of our business, which is an energy company We're not in land development; we're not in fiberboard plants. No. 2, I think we understood what people didn't want, and there was a concern about prices. Today, customers of PNM are paying 5 percent less than they paid in 1985. That means, in real terms, if you take into account inflation, they're paying 45 percent less than 16 years ago. If you put us in the mix of all energy providers throughout the country, we're below average. Eight years ago, we weren't. We're the only utility in the state of New Mexico that has not raised rates. In fact, we've lowered rates. And these were volunteered rate reductions.