Companies continue to embrace the back-to-basics strategy, and investors seem to think that it is paying off.
The CEO Forum: The Ultimate CEOs: Jeff Sterba
Chairman, President, and CEO, PNM Resources
this material. The difficulty is that since they can take title to that material, they can use it.
The notion of international storage controlled by some broader body is an appropriate strategy, but it is going to take a long time to develop. I think about how much money has been spent on Yucca. Have there been issues? Have there been things that probably could have been done differently? Yes. But I personally am not aware of anything that makes Yucca unsafe or an unacceptable storage mechanism. The problem is that it is not big enough if we continue on our single use of nuclear fuel.
Fortnightly: What do you believe are the most pressing policy issues?
Sterba: First, we are clearly moving into an era of increasingly expensive energy, and it comes in all forms: the gas people use in their cars, the natural gas by which they heat their houses and offices, and the electricity that powers so much of the economy. All three elements have moved up in price, and I believe, will continue to in varying degrees. We have, as a country, benefited from having very cheap energy for a very long period of time.
So, there is a large economic question: Can we, without disruption to the economy, adjust to energy prices that are increasing at a significantly higher rate than the price of other commodities, even though they have been not increasing and in some instances decreasing for a number of years? Certainly, natural gas prices up until 2003 had declined in real terms. Electricity had declined in real terms and, for many of us, in nominal terms. Our electric rates today are 20 percent below what they were 15 years ago in a nominal sense. That is a whole mindset change the country has to address. Coupled with that, there will be additional environmental pressures and I think carbon is probably the most significant environmental issue this industry and the country will ever have to address. We have got to do it right. These two are interrelated. Dealing with an increasing-cost energy infrastructure [while also having] to deal with carbon will put additional pressure on price, as well as significant pressure on the economy. There are a whole host of things that put pressure on cost, and I think the challenge we are going to face is how we can best manage that.
Fortnightly: As the chair of the Electric Power Research Institute, do you have an opinion of which technologies are the most promising in terms of environmental footprint?
Sterba: On the demand side there are things utilities can do to substantively help customers reduce their energy use [and] consequently reduce the supply-side footprint. We have to develop regulatory systems that will enable that, and do it effectively.
If you think about whether it is a business or home, those major energy-consuming devices like HVAC, process equipment and refrigerators, it is really simple to put a programmable logic control chip (PLC) on the front end. That equipment and that PLC can be IP addressable,