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The CEO Forum: The Ultimate CEOs: Jeff Sterba

Chairman, President, and CEO, PNM Resources

Fortnightly Magazine - June 2006

then let’s bring on the regulatory caps.” That is a disaster waiting to happen.

Fortnightly: Do you think a utility can viably build a nuclear power plant in the 21st century?

Sterba: I have a strong view about nuclear. I think it is an essential component of today’s resource mix as we move into a carbon-constrained world. There are obviously significant challenges associated with building new nuclear generation. The spent-fuel issue is one [where] the federal government has not been able to uphold its end of the bargain. And that issue has to be addressed and resolved, whether it is through temporary storage, or the federal government takes title to the material so they can manage it in this interim period of time, or through some other mechanism.

As one thinks about nuclear, all the work we have done demonstrates that under the broadest range of scenarios it is consistently the lowest-cost resource when we internalize externalities of carbon and the like. The problem is the licensing risk, the ability to get it constructed and have a supportive environment, and know what is going to happen to the spent fuel over time. But because of that higher [risk], I think you have to be of a certain size to look at nuclear and you have to be able to have enough diversity of resources so you are not dependent on a single 1,000-MW nuclear unit coming on to serve your needs for the next five years.

One of the things I’ve become interested in is smaller-sized nuclear facilities that have been used, for example, on military installations for a number of years, where you may be talking about a 50-, 100-, 200-MW unit. You may incur some loss of scale, but you also have, in some sense, a more manageable resource. So, for us to do nuclear, it either has to be like Palo Verde as a participant in a multi-owner project, or it would have to be a new-vintage smaller-scale generation resource, which is not what you see most people focused on.

Fortnightly: Given the political stalemate in Nevada, should the industry continue to focus on Yucca Mountain as opposed to another location or other solution? Are there any other viable alternatives here or abroad that have been considered?

Sterba: I don’t think it is an either/or. I think it’s both. Yucca Mountain has got to continue to be pushed to resolve the issues that remain, preferably with a little more sensibility about what the constraints should be. At the same time, I think it is incumbent on the government to evaluate an interim storage option that is probably an above-ground option (dry cask storage). Probably something like they take title to the material, [and] it’s moved in a more concentrated way to a military installation where it can be safeguarded.

There was a proposal for a storage facility up in the Aleutians. The Russians have always had an interest in becoming a storage site for material, and they certainly have facilities, some of which I have visited, that could store