Creating Energy

New Mexico Business Journal, August, 2001

The Federal Energy Regulation Commission announced recently what they don't call a cap that affects a number of western states including New Mexico. What's your reaction to that?

I'm comfortable with it for a couple of reasons. It is imposed for a limited period of time--to September 2002. I believe that in any marketplace there are relief valves. Look at the stock market. When a stock starts getting traded really oddly, they do what? They stop trading. They give the market time to react. In this instance, you can't stop selling electricity because the demand is there, but to impose some form of price moderation for a limited period of time that does not distort the long-term markets--we're willing to support that. It has a price limit I'm not concerned about.

We're going to see our way through this. One thing that has never happened at PNM is being named by California as having gouged them.

Transmission lines. The Bush energy plan includes a proposal about national eminent domain in terms of creating channels across the country for transmission lines. What do you think?

I'm a very strong supporter of that. I'm a supporter because I'm not sure I see an alternative. Let's face it. No one wants to see power lines running down their backyard, particularly if they have vistas like we do. But we also have to face the reality that we can't have a growing economy, low energy prices and no generation plants or transmission lines. It doesn't work. Transmission is inherently something that has got to be built in order to gain the efficiencies of generation across a market-place. We've seen first hand the NIMBY situation and I don't say that with disdain because I understand it. But at the same time we're not going to be able to have low cost energy without building strong transmission systems.

If you build a natural gas pipeline, where do you go to get the right to condemn property? You go to the Feds because natural gas pipelines obviously go across states and so the Feds have got to have that responsibility. If you look at electric systems, they were built largely within states, with some interconnections, and so states were given the authority of eminent domain. In order to build a grid that works effectively, you have to be able to build a transmission line from state A through state B to state C. How do you convince state B that it's a good thing for them when they're not going to get any benefit? You're not.

If you wanted to build a line from San Juan to California, you're going to have to go through at least one state and at least one sovereign nation, in addition to all the jurisdictions within the state... What would it take?

It's almost impossible. It cost us $12 million and 10 years for the Ojo project that was going through the Jemez Mountains before we got an answer. A 30-mile line. Right now, under regulation, all you can do is recover your costs. If you have to take a risk and build it, all you can do is recover your cost. If you can't build it, all you've got is a loss. Why would you do it?