Creating Energy

New Mexico Business Journal, August, 2001

I think it's the responsiveness that the company has demonstrated that has changed the perception. The third factor is that people have seen us become more competitive in our mindset. It is one thing to think of utilities as immune to competitive pressures--they just get their return and do whatever they want anyway. We're not perfect. There's an awful lot we can still do to improve our service, but I think our competitive approach is working. And a lot of that has to do with our leadership, and I think Ben Montoya [Sterba's predecessor] brought a breath of fresh air to the company. He was a good mentor to me and we have the opportunity now to benefit from the reestablishment of this company. We now move on to find ways to really benefit the state.

A while ago, you created a new company.

It hasn't been created yet. It will be called PNM Resources. It was going to be called the Manzano Corporation, but when we announced the acquisition of Western Resources, the name Manzano and its fit with the business came into question. We're rethinking it. I don't want to go through two name changes. We are creating PNM Resources as the holding company and we will announce the name of the new company once Western Resources is acquired. PNM the utility will remain PNM.

The bill passed by the Legislature in the last session refers to the ability of utilities to build plants for profit if the electricity is sold outside the state and if ratepayers bear no costs. Seems like a good bill for PNM.

We think it's an important transition bill. We would have had that flexibility in the restructuring, but given the delay in restructuring it was very important for us for two reasons. No. 1, it ensures the elimination of disincentives for the construction of new generation facilities in this state. New Mexico didn't risk putting itself in the position that California did. No. 2, we have demonstrated and created a level of expertise in the wholesale generation and selling of power throughout the western states. Very few people know this but sixty five percent of our business in electricity is not with our retail customers. It's conducted outside of the state in a competitive market, selling power all across the west.

Is it unusual for utilities to have that much power generated for outside purchase?

Yes, I'd say it is unusual. Remember that some of our power resources are not in rates. It was excluded from rates. We sell that in the wholesale market. But we also buy power in the wholesale market, package it and resell it to other utilities.

Why do you do that?

It's a business line for us. We got thrust into the wholesale market, not by choice but because we had no alternative. We had surplus power and had to find a place to put it. So we had a very strong motivation to find ways to open up wholesale markets. We were one of the leaders going back into the '80s to help develop the notion of competitive wholesale markets. We had to do that because we had power we had to sell. So we developed a level of expertise that many other utilities just didn't. And so as the wholesale market became competitive, we found that we had a leg up.