October 19, 2020 • EPE Related News
El Paso Inc Q&A: Kelly Tomblin, El Paso Electric CEO
El Paso Inc Q&A: Kelly Tomblin, El Paso Electric CEO
It’s unsettling when a company is sold and taken private by an out-of-town investment fund.
It’s even more so when most every person and industry in the region has no choice but to do business with that company to keep the lights, internet and cooling on.
El Paso Electric’s new chief executive admits as much and says her first task is to provide stability, build trust, introduce herself and reintroduce the company.
It’s not the first time Kelly Tomblin has had to do so. An American woman in a field dominated by men, she led 1,700 Jamaicans as the CEO of that country’s electric utility for more than five years. It was a company at odds with its customers when she arrived.
“My heart was broken open in Jamaica,” she says.
What kind of company is El Paso Electric now? Who is its new CEO and where does she want to take the company?
In a nearly hour-long interview, in a conference room atop El Paso Electric’s Downtown headquarters, El Paso Inc. sought answers to those questions and others.
In the coronavirus era, the role of the new CEO has been upended. And at a time when gatherings, networking events and community meetings are impossible or must be shrunk to the size of a Zoom window, building trust is a challenge.
“What I hope is that the region will get to know us again,” Tomblin says. “It’s hard with a utility. You’re already in a forced marriage with people – they are stuck with you – and nobody likes a forced marriage, right?
“My request to the community is, get to know us again.”
The daughter of a coal miner, Tomblin grew up in a company town in West Virginia where she dreamed of following in the footsteps of Barbara Walters. She earned a bachelor’s degree in journalism, becoming the first in her family to go to college.
Tomblin went on to get a law degree from West Virginia University and an MBA from New York University’s Leonard Stern School of Business.
She has worked for more than 25 years in the energy industry, working in markets throughout the United States, the Caribbean, the United Kingdom and Latin America.
When Tomblin arrived in Jamaica in 2014 to take over as president and CEO of Jamaica Public Service Company, one of the Caribbean island’s newspapers described the utility as being “on most consumers’ hate list.” Customers wanted to see the “dismantling of what they consider an oligarchical monopoly with a stranglehold on individual lives and that of the Jamaican economy.”
While there, Tomblin introduced liquefied natural gas into Jamaica’s energy mix, increased renewable energy and began a smart grid program. She was named the winner of the S&P Platts Global Energy CEO of the Year award in 2016.
Tomblin’s first book, “100 Days of Doing Power Differently,” was published in 2018 and explores power and leadership in the #metoo era.
Most recently, Tomblin was CEO of INTREN, an Illinois-based company that builds gas and electric utility infrastructure.
In late July, El Paso Electric was purchased by Infrastructure Investments Fund in a $4.3-billion buyout, and, after 73 years on the New York Stock Exchange, was officially taken off the public market.
The 118-year-old utility provides power to about 440,000 retail and wholesale customers in the Rio Grande Valley, West Texas and Southern New Mexico.
The utility’s previous CEO, Mary Kipp, stepped down last year to take a position at Puget Sound Energy in Washington state, and El Paso Electric was led by an interim CEO until Tomblin stepped into the role on Sept. 1.
Tomblin is moving to El Paso with her husband, Steve Morgan, who also works in the energy industry. (“I met him in a merger and acquisition,” she says.) But first they have to find a house. As in many parts of the country, with the real estate market booming and inventory low, that can be difficult.
“You know what the real estate market is like? It’s nearly impossible to find a house,” she says. “I bid $50,000 over the asking price and still lost. Now I have a house that they have accepted the offer.”
Tomblin was an early adopter of hybrids and electric vehicles. (“I started with a Nissan Leaf and then worked my way up.”) And on a recent Tuesday, her husband was making his way to El Paso in their Tesla when Tomblin spoke with El Paso Inc. in Downtown El Paso.
Q: Where did you grow up?
A tiny town called Man, West Virginia. My dad’s a coal miner; everyone was. Just to give you a flavor. My school is the Manheim Hillbillies. I was a cheerleader. My junior high was the Pioneers. And then I went to West Virginia University, so I’m a Mountaineer. So, yes, I’m a country, mountain girl. I have a journalism degree, and I got out of school and couldn’t make any money so I was working another job.
I was working at the newspaper, I was DJing at night – I was Kelly T at WLOG – and I was teaching school. The school was going to make me go back and get a certificate. Instead, I went to law school. I moved to Pittsburg, and I always thought I would go back as soon as I paid off the student loans. And you know how that goes. It didn’t happen.
Q: What did you want to be when you grew up?
I wanted to be Barbara Walters. We didn’t know people who had gone to college, right? I was good at math and science, so I went to University of Kentucky first and studied electrical engineering because we knew people with engineering degrees got jobs. But I just hated it. I was a writer. I wrote poems.
I didn’t even tell my mom and dad I changed my major in forever. They were so upset I would never get a job, and when I got out, it looked like it was coming true.
But long story short, I thought I was going to be Barbara Walters, and I ended up my whole life with electrical engineers. I married one, I work with them, so I guess the divine has a purpose and you just can’t run away from it. (Laughs)
Q: How did you get into the electric utility world?
I had gone to law school and was working for a big firm and realized I was working in the 777 club as we called it back then – seven days a week, 7 a.m. to 7 p.m.
A lot of working in a law firm is billing hours, but it’s also marketing. I was one of the few women, and I spent a lot of time going to ball games and parties and so forth. So I thought being in-house counsel would be better, and it was. I joined an energy company then.
At the time, the energy industry was going through deregulation, and I moved to the international arm that was buying and selling companies internationally. Then I went back to run the company after I had done a lot of mergers and acquisitions.
Q: Then you went to Jamaica to lead the electric utility there, which was fairly hated at the time. What did you learn?
I learned a lot technically, but I’ll tell you what I really learned. My heart was broken open in Jamaica. I had been living and working in New York City, and that’s a different kind of clientele. My kids were going to school with Bon Jovi and Bruce Springsteen’s kids. Neither my husband nor I have that background, and we thought our kids were becoming brats. (Laughs).
All of a sudden, my company got bought – we already had to move to Houston – and then I got a call out of the clear blue sky asking if I wanted to interview in Bermuda or Jamaica for the CEO job.
When we went there, of course, I’m a white woman and an American, and the company had South Korean and Japanese ownership. That made it all interesting.
But you know what? Jamaica could have been very nasty to me, and when I went there, they were protesting in the streets and had a customer group that was opposing the utility. But they gave me a good shot, and there has been nothing that has been better for our family.
They taught me a lot about being open to somebody else’s idea of how the world works and how you welcome people who are not like you – a lesson we could probably all use right now.
Q: You wrote a book in 2018 in the context of the #metoo movement. In it, you talk about doing power differently. What do you mean by that?
Being in the power industry, it worked as a play on words. It means do power differently – greener, less hierarchical, less bureaucratic. But it also means the power we each bring. Martin Luther King Jr. said it best, “Power without love is reckless and abusive, and love without power is sentimental and anemic.”
It was building on this idea that power has been defined in a way that sounds bad – we want power! – but what it can do is right wrongs.
In the workplace, the reality is that it defines a lot of our life. It is so impactful, and sometimes we aren’t conscious of that. We need to think about how we use power in the workplace and our lives.
We read books, we go to conferences, but employee engagement surveys indicate very little has changed. We’re getting it intellectually, but not incorporating it in our whole self. The book goes through a 100-day process to help leaders incorporate a new way of leading.
Q: Your predecessor, Mary Kipp, started a number of initiatives to identify top performers and provide networking opportunities for women. What kind of environment have you found at El Paso Electric?
In the energy industry, we’ve been having these discussions for decades. Are they still required? Yes. And do certain cultures struggle more with it than others? Certainly.
Here, Mary created a great platform and opened up the discussion. I’ve already met with our Women’s Power Pipeline group. There are a couple of different platforms, and we are going to expand on them.
I have had great success taking risks on people, putting them in jobs that don’t look like a straight line. We have a robust talent review process where we look at everybody across the company.
Q: How did you learn about the CEO position here?
The industry is quite small at the leadership level, especially for women. I was looking for board seats because I was getting to that place in my career. And I know this fund (Infrastructure Investments Fund) and people in the fund. Two women I knew that were on the boards of IIF companies were both like, This is a great fund. They are long term. They are committed to diversity.
I applied for a board seat and met with the people who ran the fund. They knew my history with Jamaica and Pennsylvania Electric Company, and they were like, this is what El Paso needs. We need to really engage with the community more. We need a smarter grid, more renewables – the stuff you’ve done. And they said I should apply for the CEO position.
I see so much opportunity here. We haven’t been a first-mover, like other places with smart grids and more renewables and such.
The good news about that is we get to learn from them. Many got it wrong. You want to manage the price for your customers while making it more green and upgrading technology.
If you are going to add renewables, and we all want to because we want it cleaner and greener, you need to have generation that’s flexible to manage the intermittency of renewables. Traditional generation plants, you can’t just turn them up and down.
Q: Why does El Paso Electric need to build another gas-fired generating unit at the Newman Generating Station? It has sparked protests from some environmental groups, and the El Paso City Council voted unanimously to oppose it over concerns about the cost.
COVID-19 has created a challenge. Normally, you would hold community meetings to hear from residents and explain your plans.
Let me just say this as transparent as I can: No power resource right now is perfect. Why we need this new unit is we have a 60-year-old power plant that does not provide the reliability we need for economic development and to ensure we have power when it is 110 degrees.
I wish we had built it earlier. When El Paso Electric went through bankruptcy in the 1990s, it didn’t do a lot of capital investment and we’re playing some catch-up.
We built the Montana Power Station, and that has really helped us. Now we need one that will accommodate renewables. It will use less water and it will use less gas. It will be cleaner than what it is replacing.
I’ve been doing this a long time and can count myself as an environmentalist. I’ve driven electric vehicles since they came out. I am mostly a vegetarian for the climate reason. My heart is there. If there was another way… If we could just plop down renewables… but it doesn’t work that way.
It’s my hope that this is the last gas-fired power plant we’ll ever build. My vision is that we are able to add renewables and storage going forward and that we can have energy efficiency be so much a part of peoples’ psyche that we don’t have to build to an ever-growing peak.
We also have to manage the price for our customers.
Q: How would the new unit support renewables?
You need a power plant that can mirror the ups and downs of the power renewables provide – that can start quickly. We don’t have that kind of generation now. This unit would be able to respond to the intermittency of renewables. The real holy grail is storage. That’s the long term.
Q: I know you haven’t been here long, but what is your initial impression of the company’s strengths and weaknesses and those of the region?
Talent. We are unbelievably blessed that we have three major colleges here, Texas Tech, UTEP and EPCC. And graduates stay when they can, or they leave and return. And I haven’t even mentioned the talent across the border.
We have a solar resource that is really, really strong. We have a lot of opportunity right now at a time when the cost is not prohibitive for renewables. We have an electric vehicle strategy that will help cut carbon and utilize the electric grid better.
We have a real opportunity to jump-start our plans because we have the advantage of watching how other utilities have done the things we want to do.
Q: What are some of those plans? What are your top priorities?
This team has been through a lot. They have been through a year-plus long transition to a privately held company. They are seeing a change in leadership, and in the midst of COVID-19, I’m really proud of how we have handled that. We have people who have been out there working every day since the day this started to keep power flowing to hospitals and other critical infrastructure. That’s first, providing some stability.
No. 2 is really pursuing our agenda for a greener environment for our region, and that has a couple of components, one of which is adding renewables, but we have to replace this 60-year-old equipment to be able to do that. We’ve got to make sure we have reliable generation. When businesses look at coming here, that’s one of the first things they want to know.
For us, it’s even more urgent because we have a mandate in New Mexico already: 100% green by 2045. Our customers here in Texas are asking us to do the same thing.
No. 3 is education. We all have a role to play, but it’s difficult if we haven’t really gone in and partnered with our community to say, Here’s what we’re going to do. We’re going to build a plant that is more efficient and can accommodate renewables. And here’s what you can do. Don’t turn on your dishwasher during peak-hours. We can promote energy efficiency and talk about smart homes. We did a smart home in Jamaica. We can do it here.
Q: How much energy does El Paso Electric produce from solar now?
About 5%. There is a lot of room to grow. Right now, we are looking at the best way to do that cost effectively.
Q: As a public company, El Paso Electric was required to make public disclosures. Now it’s a private company owned by an investment fund. How does that change the way the utility operates?
When you are working for a public company you can be tempted to look short term and focus on quarterly results. Independent investors allow us the flexibility to be more strategic and independent and ensure we are not living quarter-by-quarter.
As far as transparency, we are a highly regulated business. We are still regulated by FERC, NERC, the PUC and the PRC. We pride ourselves on being transparent.
The reason the leadership before me wanted to go private is so we could get capital injections in a more structured way. They’ve already injected $125 million into the company as they promised they would. I mean, we called one day and it was here the next.
We are one of 19 portfolio companies. I was on this morning at 6 a.m. for our investor conference. It’s very interesting for me to hear how the other CEOs are, for example, handling capital investments and what their priorities are.
Q: It seemed like there were more power outages than usual this summer. Is that true?
I wasn’t here this summer, but I’ll say this. I think you can hear my passion for the climate. This summer, we had fires raging in California, hurricanes, derecho’s in the Midwest. You had people out of power in the Gulf Coast.
Weather events drive outages.
Here in El Paso, we had a significant increase in heat. I wasn’t here yet, but I was praying when I saw the heat and load going up and up. The team did a fabulous job when the heat went over 100 for weeks on end.
We’re going to have to rethink how we think about climate, and that’s a reason why we’re really in an urgent place right now to replace old generation.
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