Mary Kipp, a federal prosecutor turned Texas utility executive, will become the president at Puget Sound Energy next month — a leadership change that comes at a critical moment for the state’s largest energy utility.
Kipp, 51, who has served as president and CEO at El Paso Electric since 2014, will eventually become PSE’s CEO when Kimberly Harris, who has run the Bellevue-based utility and its Puget Energy parent company for nearly a decade, steps down in January, 2020
The transition is a rare example of a woman CEO being replaced by another woman — almost unheard-of among large U.S. corporations.
Kipp’s hiring at PSE, announced Monday, comes as the investor-owned utility confronts enormous challenges.
In recent years, Washington state’s utilities have faced an energy sector transformed by climate politics, as Gov. Jay Inslee, Democratic lawmakers and environmental groups have pushed through ambitious policies to cut carbon emissions from fossil fuels.
Under the state’s new clean power law, utilities must abandon coal-fired power by 2025 and are supposed to be completely carbon-free by 2045.
“I have been a very vocal advocate of the need to combat climate change however we can,” said Kipp in an interview Monday afternoon. “As a utility, we don’t set public policy, but we find the very best ways to comply with it.”
That’s a huge ask for PSE. Although the utility gets 33 percent of its power from carbon-free hydroelectric dams, 59 percent of its energy still came from fossil fuels in 2017, according to PSE’s most recent figures. Coal alone provided 38 percent of the utility’s energy mix.
By contrast, many other Northwest utilities are far less reliant on fossil fuels, said Arne Olson, senior partner at E3, a San Francisco-based energy consulting firm that has analyzed the impacts of a cleaner Northwest electricity in a study paid for by utilities and utility groups. Seattle City Light, for example, gets more than 90 percent of its electricity from hydropower.
PSE’s carbon-intensity means the utility has “more to do, more investments [to make] in clean energy to comply with the most recent state statutes,” Olson said.
Further, to meet the state’s ambitious goals, Kipp and PSE must figure out how to replace that carbon-based supply without hurting the reliability and affordability that carbon-based energy has provided the utility and its customers for decades.
And Kipp must carry all that out while satisfying PSE’s investors, which include several large Canadian and European pension funds.
“Mary Kipp is walking in at a time when there are going to be some really important decisions to be made,” said Sean O’Leary, spokesman for the clean-energy advocacy group Northwest Energy Coalition.
On paper, it’s a familiar challenge for Kipp.
Although El Paso Electric (EPE) is less than half the size of PSE — it serves just 421,000 customers in a 10,000-square-mile area in west Texas and southern New Mexico — the utility has already begun reducing fossil fuels. PSE has 1.1 million electric customers and 840,000 natural gas customers.
In 2016, EPE eliminated coal-fired power. It has also been complying with an ambitious set of green-energy policies adopted in New Mexico not long before Washington state adopted its own climate policy.
Still, EPE’s green accomplishments come with qualifications. For one, the Texas utility started with far less coal-fired power in its portfolio than PSE has. As important, in its Texas operations, ESE hasn’t phased out its use of natural gas. That’s significant, because natural gas, though less carbon-intensive than coal, still releases plenty of CO2 and other greenhouse gases.
For that reason, energy experts and climate advocates in Washington state will be watching closely to see whether Kipp pushes for a truly aggressive shift away from carbon or hews to a more conservative, gradual transition, or one that relies on natural gas, which currently accounts for 21 percent of its power mix.
And one obvious test, climate advocates say, is how PSE tries to replace the electricity it will lose from those phased-out coal-fired power plants.
One concern is that PSE, which already has a huge natural gas infrastructure in place, will push to replace coal with new gas-fired power plants. “What we need the new CEO [Kipp] to do is to fundamentally acknowledge that gas is going away,” said Doug Howell, who serves as a senior campaign representative for the Sierra Club’s Beyond Coal.
But Kipp will almost certainly resist such calls, in part because renewable energy, such as wind or solar is “intermittent” — that is, it can’t be depended on 24 hours a day, 365 days a year, the way a coal- or gas-fired power plant can.
“We have to take a balanced approach so that we make sure we do things in a way that doesn’t compromise reliability or safety or affordability for all of our customers,” Kipp said in Monday’s interview.
In the meantime, energy experts say, Kipp’s arrival at PSE signals another important development — the transition of a top corporate job from one woman to another.
According to Catalyst, a nonprofit that promotes and monitors female corporate leadership, “women have succeeded other women as CEO on only three occasions” among Fortune 500 companies. Although PSE is not part of the Fortune 500 — it comes in at No. 705 — Kipp’s hiring marks a welcome shift.
One factor, said Olson, the consultant, is that even conservative utility boards have grown accustomed to seeing “women get promoted to higher and higher positions [at utilities] and do extremely well.”
“It used to be an old-boys network,” he added. “And it’s really changed for the better.”