Anchoring energy policy in trust and economics
Ann Murtlow ’82 is former CEO of Indianapolis Power and Light (IPl), where she improved the utility’s reputation while managing sustained growth and reducing power-plant emissions. Previously, she served with AES Corp., a global power company with generation and distribution businesses. At AES, she rose from project manager responsible for permitting new power plants to vice president with P&L responsibility for a portfolio of generation businesses in europe. She also served as liaison to the AES board of directors on global environmental policy and performance. Murtlow sits on the board of directors of Herff Jones and the federal Reserve Bank of Chicago and on Lehigh’s Engineering Advisory Council. She is a past chair of the Central Indiana Corporate Partnership.
Q: You became CEO of IPL in 2002 at a time of great economic uncertainty. The stock price of AES, the new parent company, was falling and IPL was receiving unfavorable media scrutiny. What steps did you take to help rebuild IPL’s reputation?
A: When I was hired to do the turnaround, I took several steps. First, I owned up to and apologized for the integration mistakes the company had made immediately following the acquisition. Second, I asked community leaders for time to fix our problems. I spent six months meeting with employees to understand what we were doing right and what needed improvement. Then I focused on driving performance.
I also hired a strong leadership team and led the development and implementation of an operating strategy call BTB, “Be the Best.” That drove performance excellence in seven areas: reliability, customer service, safety, financial performance, commitment to compliance, employee engagement and community leadership. Finally I placed a high priority on leadership development.
I was CEO at IPL for nine years and was delighted with what the company was able to accomplish during my tenure as leader.
Q: At AES, you helped obtain approval to build new power plants. How did you deal with public concerns over these plans and what did you learn from these challenges?
A: I spent the early part of my career at AES doing power plant siting and environmental permitting. The ability to communicate to regulators, legislators, business leaders, environmental groups, the general public and the media was essential.
I learned valuable lessons. First, preparation. You need to understand the audience perspective and their level of understanding. Second, people are more likely to support a project if they feel it benefits them and they have some chance to shape it. So asking for feedback and incorporating some of it is a good idea. Third, dialogue is a two-way process. But that can be difficult when the opposition is orchestrated. Your time is best spent with those with an open mind.
Finally, human beings respond to personal interaction; there’s no substitute for genuineness. People will listen to those they trust. So, be yourself.
Q: How serious is the problem of aging energy infrastructure in the United States?
A: Much of our infrastructure is well built and has significant life remaining. Certainly, we have aging infrastructure that will require refurbishment and replacement. But replacing plants is no simple matter. The electric utility industry is very capitalintensive and heavily influenced by federal energy and environmental policy.
Several factors influence investment in infrastructure: the new environmental regulations, including EPA Mercury and Air Toxics Standards (MATS) and the proposed new standards for greenhouse gases; renewable energy mandates such as federal incentives for solar and hydroelectric assets; and incentives such as DOE grants to support the development and commercialization of new technologies.
The biggest factor affecting the timing of investment is the uncertainty of electricity demand growth. Given the competing priorities for capital, players in the industry will be reluctant to invest until infrastructure is truly needed and acceptable financial returns are likely.
Q: Can nuclear power be considered a green source of energy and should the U.S. increase its reliance on nuclear?
A: If one considers air emissions, nuclear is a green energy source and the only realistic option to replace fossil fuel if carbon legislation is passed. Some would say that without a long-term solution for nuclear waste storage, no plants should be built.
I’m a proponent of nuclear power. But a nuclear plant is a big investment that can make or break a utility. It takes more than 10 years to get one built. Given today’s pricing dynamics, gas-fired generation as a replacement for retiring coal plants will be the way to go to reduce emissions.
But if we develop the technology to build smaller nuclear reactors, permitting might be significantly easier, construction times would be shorter, and nuclear plants would be cheaper and more versatile.
Q: Given the abundance of coal in the U.S., and environmental concerns and political realities, what is coal’s future as a power source in the U.S.?
A: In the short term coal will continue to fuel a significant portion of U.S. electricity generation, now about 45 percent.
Longer-term, it’s a different story. There are the New Source Performance Standards (NSPS) for greenhouse gases that new coal plants simply won’t be able to meet without carbon capture and sequestration. There are also technical, economic, legal and regulatory issues associated with permitting of carbon capture and sequestration storage sites.
So it’s extremely risky to invest in new coalfired plants now. Natural gas, because of these environmental regulations and because it’s cheap, will be the fuel choice going forward.
Q: You have served five years as a director with The Mind Trust, a nonprofit seeking to improve public education for underserved students. What reforms are most needed to help children develop their potential?
A: At The Mind Trust we’ve promoted a number of reforms: an education entrepreneur fellowship program; bringing in top-quality teaching talent through groups like Teach for America and the New Teacher Project; and a national charter school incubator that offers $1-million grants to start charter schools.
In November we released a report, “Creating Opportunity Schools,” recommending an overhaul of an entire urban school system. Opportunity schools would get unprecedented freedom over staffing, budgets, culture and curriculum, if they meet high standards. These are the reforms I would recommend.
Q: What can the U.S. do in K-12 and higher education to encourage and prepare more students to study engineering?
A: Evidence shows that many students who pursue engineering have family members who are engineers. As a result, they understand the opportunities engineering provides, and they have mentors to help them. We need to provide that same exposure to other young people and let them know that engineering is important to our country, that engineers have great careers, including business careers based on technical ability, and that there are opportunities for engineers particularly in this job market.
Q: It has been said that we often learn more from failure than from success. Has that been true in your career?
A: One of the most important things anyone can learn is that failure is rarely fatal. At AES, which grew from a start-up when I joined to a $17- billion global company, I certainly made mistakes. But I learned from them and then shared what I learned. Tolerance for failure is necessary to encourage innovation.
Q: You earned a B.S. in chemical engineering from Lehigh. How did your time here help you in your career?
A: Lehigh is highly respected and internationally known. Anyone who earns an engineering degree from Lehigh commands respect because of the rigor of the program. Although I practiced engineering only for a short time, my ability to think deeply and analytically, and to take on difficult problems and develop solutions, has served me well every step of the way — in management as well as engineering.
Interview by William Tavani
Photo by AJ Mast