Ann D. Murtlow, Indianapolis Power & Light Co.; Larry Doran, Peterborough Utilities Group
by Kristen Wright, associate editor
Ann D. Murtlow
Editors at Electric Light & Power magazine in the fall asked readers to nominate CEOs of North American electric utilities in two categories. The large utility CEO must work at a North American utility having 400,000 or more customers; the small utility CEO must work at a North American utility having fewer than 400,000 customers. After examining every essay entry, the editors agreed.
The CEO of the Year in the large utility division is Ann D. Murtlow, president and CEO of Indianapolis Power & Light Co. The CEO of the Year in the small utility division is Larry Doran, president and CEO of Peterborough Utilities Group in Peterborough, Ontario, Canada.
We interviewed both winners and presented their awards Jan. 30 during the second annual Electric Light & Power Executive Conference in San Diego.
ELP: When you were young, did you aspire to become a utility CEO? How did you get where you are?
Murtlow: I can't say I ever aspired to this position, but now that I'm here I have to admit that I feel very privileged to work as a leader in an industry that is so fundamental to the lives and livelihoods of our customers and communities. It is hard to find another industry where the pursuit of excellence can be so meaningful to so many.
I was fortunate to have exposure to the power business early in my life. My father, who has electrical and nuclear engineering degrees, worked for the utility industry most of his career, first as an engineer and then as a senior executive. He was deeply involved in the development of the U.S. nuclear industry, and I was fascinated with the subject both because it was technically interesting and because it was controversial. I toured my first nuclear plant and uranium mine when I was 10 years old.
I went to college to become a chemical engineer and upon graduation worked for Bechtel Power Corporation designing power plant systems and licensing nuclear plants. I was recruited to AES in 1987 when the company was just a start-up and the independent power industry was in its infancy. I had the opportunity to work for some brilliant people who were willing to both teach me and bet on my abilities. I became the company's environmental expert. As AES grew to be one of the world's largest global power companies, my ability to ascend and grow was only limited by my willingness to take on new challenges. After leading the AES Warrior Run Cogeneration project to a successful $440 million financial closing, I went abroad to develop new business in Europe and Africa. Shortly thereafter, I was leading all of AES' operations, construction and development in 22 European countries. In 2002, a year after AES' acquisition of IPALCO Enterprises and its subsidiary, Indianapolis Power & Light Company (IPL), I was recruited to lead the integrated utility, which serves nearly 470,000 customers, and its parent company. It was my first foray into the regulated side of the industry.
It has been an honor to lead such a talented team on a great journey over the past eight years.
Doran: Until my first year of university, I really hadn't decided on any specific career, much less a specific industry. Once in engineering, however, I quickly concluded that a career that combined technical and financial knowledge was what interested me most.
In second year, I obtained a summer job with Ontario Hydro and two years later joined them on a full-time basis right out of school. The same week I started with Ontario Hydro, I began working toward my MBA through evening classes. Over the next 30 years with Ontario Hydro and its successor, Ontario Power Generation (OPG), I had the opportunity to work in most areas of utility business: distribution, transmission, generation, marketing, business development and system planning. I left OPG in 2004, ran my own consulting company for a couple of years before joining Peterborough Utilities as president and CEO in 2006.
ELP: Ann, tell me about your sustainability projects at Indianapolis Power & Light Co., such as wind generation and electric car partnerships.
Murtlow: IPL has approximately 3,500 MW of generating capacity, which meets the vast majority of our customer demand. In 2009, approximately 80 percent of our capacity and 99 percent of our energy came from coal-fired generation. In the face of increasingly stringent environmental regulations and the potential for greenhouse gas regulation, we decided to take a proactive approach to diversifying our supply.
We were able to secure long-term power purchase agreements with two wind farms: one in Indiana and the other in Minnesota. As a result of these agreements, 7 percent of IPL's energy will be renewable by 2012. In addition, we have spent more than $500 million during the past five years to add or upgrade environmental controls at our largest coal-fired units. We are currently in the process of upgrading the flue gas desulfurization on one of our largest units.
In addition, we are also engaged in pilot programs for smart grid and electric vehicles supported by a $20 million grant from the U.S. Department of Energy. Our electric vehicle pilot program, called Project Plug-In, is unique in its partnerships. We are working with more than 40 partners, including companies with auto and related components, design and manufacturing, state government agencies, retail and parking merchants and utilities to advance electric vehicles in our market and make the experience seamless for customers across utility service territories.
ELP: Larry, Peterborough Utilities Group recently started expanding outside of just distributing water and electricity within the city. Tell me about those projects.
Doran: The Peterborough Utilities Group (PUG) has been operating the local water and electrical distribution systems for almost a hundred years. In addition, it has owned and operated a small hydroelectric generation facility for more than three decades. However, it was the opening of the Ontario electricity market in 2000 and then the Green Energy Act of 2009 that provided both the impetus and the opportunity for PUG to dramatically increase our renewable generation portfolio.
|Peterborough Utilities Group's 8 MW Robert G. Lake Generating Station|
Late in 2009, we brought into service a new 8 MW hydroelectric generation facility. Within the next month we will produce the first power from our 10 MW solar farm. This will be followed by a 2 MW landfill gas facility in early 2012 and a 6 MW expansion of one of our hydroelectric facilities within two more years.
Peterborough Utility Group's 10 MW Lily Lake Solar Farm in Ontario, Canada
ELP: The PUG solar farm is a big deal because Ontario has vowed to shut domestic coal-generating stations by 2014. How far along is the solar farm? Has it hit any snags along the way?
Doran: The solar farm is expected to produce first power within the month and be completely in service by the end of March. Like all large projects, we have had some challenges along the way, but I am pleased to report that we are now on the home stretch. The total time from us acquiring the site to producing first power will be under 12 months.
ELP: What has been your most difficult decision as CEO, and what was the outcome?
Murtlow: My most difficult, important and rewarding decisions involved creating the platform for IPL to be successful going forward and building the senior team who would execute its implementation and leadership. Prior to the acquisition in 2001, IPL was a successful, traditional vertically integrated utility that had never faced the competition that led so many companies in our industry to change. It was my goal to transform IPL through the creation of an operating strategy that would drive sustainable excellence and continuous improvement.
In building a new senior team, I wanted to create balance between the credibility, history and talent that longtime IPL people could bring and the need for change that talented people from outside the company would offer. I settled on a small team of senior executives, which provided the best of both pools. It is a pleasure to work with a team that brings a wide range of experience and perspective to our decision-making.
The collaborative internal effort resulted in our Be the Best (BTB) operating philosophy that drives the creation of extraordinary value for our stakeholders through a concentration in seven major areas of performance: safety, financial performance (rates and shareholder value), reliability (wires and generation), commitment to compliance, employee engagement, customer satisfaction, and community leadership. This philosophy combined with our global AES values and the IPL Pledge, which defines the expected behaviors of IPL leaders and individual contributors, have created a culture of flexibility and continuous improvement that has allowed us to create an excellent value proposition for our customers, communities and shareholders.
Doran: The most difficult decisions are always those that involve people. During the past five years I have concentrated on putting together and developing the strongest team possible. I believe that our consistently strong financial, operating performance and safety results demonstrate that we've been successful in that regard.
ELP: What have you done to keep your companies afloat during the Great Recession?
Murtlow: An organization's ability to survive and thrive in hard times is built into its culture and operating philosophy. We are a lean organization, and we are always looking to maintain the right quality and quantity of people in the right places within the organization to meet our future needs. We also strive to drive and plan for good times while remaining prepared to quickly implement financial recovery plans in the event of a downturn. It was this plan, developed in 2008, which allowed us to swiftly react to rapidly deteriorating economic conditions in 2009. The plan was developed collectively by the leadership team of IPL and had a high level of buy in. When it became apparent that we needed to act, the plan was executed by the IPL team with skill and determination resulting in significant mitigation of margin that otherwise would have been lost due to a decrease in customer load. We are absolutely delighted that, despite the challenges of the past few years, IPL remains one of the lowest-cost and highest-reliability providers of retail electric service with an excellent customer satisfaction rating.
Doran: The recession poised more challenges for some of our customers than for PUG. Although their problems become our problems to some degree, through a combination of productivity gains and the success of our development projects we've been able to hold rates down and consistently improve net income. We achieved a 40 percent increase in net income in 2010 and expect an increase of a similar magnitude in 2011.
ELP: How is smart metering coming along?
Murtlow: It's going very well. IPL was an early adopter of automated meter reading (AMR) equipment in the late 1990s. This technology, which allows for meter reading using cellular technology, is now being leveraged to achieve two-way communications to help a subset of IPL's customers manage their energy usage. IPL is installing an advanced metering infrastructure (AMI) system, including a radio mesh network and data collection system, to serve its large commercial and industrial customers and a portion of the existing residential AMR customers. This pilot strikes the right balance between the cost of these new technologies and the need to be ready to empower customers when costs go up to support new investment. This will be critical in maintaining IPL's excellent value proposition going forward.
Doran: We have virtually completed the deployment of our electric smart meters and the associated infrastructure for our customers. In 2011 we will begin the process of rolling out a similar system of intelligent meters to our water customers. The two metering systems–both provided by Elster Metering–integrate together, significantly reducing the cost of our communications and customer systems.
Indianapolis Power & Light
ELP: What is a typical day for you?
Murtlow: It varies depending on the day, but almost every day consists at least in some part of vigorous exercise, internal meetings on strategy and operating performance, and nonprofit or civic activities. I often speak to large groups about the challenges facing our company and its customers, such as increasing governmental mandates that will increase costs in the future. I also enjoy speaking to groups of corporate executives and college students about leadership. My favorite part of the job, however, is getting out to spend time with folks engaged in their jobs at IPL. Spending a day with a line crew is a great way to learn their jobs, to enhance relationships and to answer questions about the company's strategy and decisions.
Doran: Luckily for me, we have a wide range of businesses so my typical day varies continuously. In addition to our electrical distribution systems, water and wastewater systems and our generation projects, we have a significant provincewide commercial metering business, an equipment rental business and even a zoo. I doubt if many of my peers can say they run a zoo–a zoo that averages more than 300,000 visitors a year.
ELP: Do you have a mentor or someone you look up to in the industry? Or has anyone taught you something particularly useful in your role as CEO?
Murtlow: My father was obviously a huge mentor early in my life. He taught me to question how things worked, to debate effectively and that there is no substitute for hard work and honesty. At Bechtel, I was fortunate to work for Greg Smith, a team leader who encouraged me to develop a water treatment expertise and to publish an article on the subject. At AES, I gained tremendously from my relationship with Roger Sant, one of the founders of AES. He has been wildly successful in his career and is one of the smartest, most insightful and humblest people one could ever know. His leadership style and fundamental beliefs about people inform my leadership style to this day. Finally, at AES, I had the opportunity to work with Stu Ryan, who remains a close friend. Stu taught me that the best way to develop people is to ask probing questions rather than make decisions for them. I am the product of the influence of these people, and many others who I have the great fortune to be associated with both inside and outside the company, and I am deeply grateful for their support in both the past and present.
Ann Murtlow, chair of Women's Fund of Central Indiana
Doran: I believe some of the best advice I ever received was from my first manager at Ontario Hydro. He said, "It doesn't matter how good your Plan A is; what matters is how well Plans B and C work out when Plan A doesn't."
ELP: How are you involved in your community outside of work?
Murtlow: One of the tenets of our BTB operating philosophy is community leadership. This means that we work hard not only to support the communities in which we operate with financial donations, but we encourage IPL people to be involved in the leadership of organizations that do good work, and the company, in turn, supports their efforts through our gift-matching program. I am no exception. In addition to participation at the board level of industry and civic organizations like Edison Electric Institute, Indiana Energy Association and AEGIS Insurance Services, I am on the board of a number of local organizations such as Central Indiana Corporate Partnership, Central Indiana Community Foundation and the Indianapolis Chamber of Commerce. I currently chair the Women's Fund of Central Indiana, a wonderful organization which provides philanthropic education for women and girls of all ages and provides grants to support women- and girl-serving agencies. I am on the board of Herff Jones, an Indianapolis-based company which is a leading provider of caps and gowns, class photography, class rings and educational tools to schools, and Walker, which helps companies solve their business issues through the development and implementation of customer-focused strategies. Finally, I am privileged to serve as a director of the Federal Reserve Bank of Chicago, particularly during these extraordinary times.
One might think these are pretty disparate activities. That is by design. I get involved in activities that I am passionate about, can add value to and from which I can learn.
Doran: I have had the opportunity to serve on a variety of community initiatives from hospital boards, to youth groups, environmental groups and the United Way.
ELP: How do you spend your spare time?
Murtlow: I exercise–cardio, Pilates, weight training and yoga–six times a week. I love to spend time with my husband of 24 years and my two children, ages 20 and 16, and enjoy casual time with our friends in Indianapolis, including an amazing group of professional women. There is nothing that relaxes me more than time in a boat on the water on a bright, sunny day.
Doran: Most of my spare time is spent with family either at home, our cottage or traveling.
IPL streetlight lineman near child development center
ELP: Ann, you are one of a few female CEOs in the energy industry. What must girls and women do to become the next Ann Murtlow, president and CEO of a large utility?
Murtlow: The same thing that men and boys have to do: Work hard and stretch yourself over and over again. Ask questions, treat people right, don't be afraid to fail, be a team player, maintain your humility and give credit where credit is due. Learn from all your experiences, both good and bad. Learn from your failures and celebrate your successes but don't dwell on either. Never forget that you have choices in your personal and professional lives. Don't be afraid to make them and to be comfortable with those choices. Strive for the ultimate in excellence. Being the best or first woman in a field is a stepping stone to being the best when all participants–both men and women–are considered.
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