Portrait of a Leader: Ralph Izzo

A common retort when we don't know an answer is, we're not a rocket scientist. In this portrait of a leader, we're featuring someone who can't use this excuse. Why? Because he is a rocket scientist. Well, close; he's technically a nuclear physicist.

Ralph Izzo currently serves as Chairman, President, and CEO of Public Service Enterprise Group Inc. PSEG as many know it. Under his leadership, PSEG was recently awarded the Edison Electric Institute's 2022 Edison Award, which recognized substantial efforts to protect and support customers following Superstorm Sandy. But what led Izzo to this career in energy? It started with a common everyday interaction with the energy market: filling up at the gas pump.

Getting into Energy

In 1973, when Ralph Izzo was sixteen years old, he could finally get his driver's license in New York City. Unfortunately, this was during the 1973 Oil Crisis. So, after waiting all his life for his ticket to freedom, his driver's license, he spent that freedom waiting in line to purchase gasoline for his father's car. Of course, he didn't have his own yet. 

After surviving one oil crisis, in 1979 he got to repeat the experience. But at that point, Izzo had made it to college. He then thought that a major related to energy could be very useful. A lack of energy security was becoming a huge issue in many ways.

There were the economic consequences of exorbitant energy prices, inflation, and recessions. Izzo decided to pursue a mechanical engineering degree concentrating on energy conversion, believing this would equip him to work in the energy industry of the time. But if he wanted to play a role in changing the way energy is produced, he knew he needed to look at things outside of the then current technology.

While working on his bachelor's in mechanical engineering at Columbia University, Izzo became more involved in finding energy solutions. They had an experiment underway in fusion energy research at the university. However, fusion energy at the time was believed to be twenty years away from commercial feasibility, even with limitless potential supply with large quantities of hydrogen in seawater. 

During those days, things like solar energy fuel cells and the hydrogen economy were also thought to be at least five years away from commercial possibility. So, Izzo did a bit of work on trying to figure out which path was the right one.

He concluded that while many of these technologies were closer to feasibility, fusion had the greatest payoff. To him, it was nothing more sophisticated than a realization. Fusion is the process that takes place in stars. He believed that was something we should replicate on earth, because it seemed that the universe had figured out it was the way to go.

This led him to continue pursuing his research and consequently, his Columbia education. He went on to get his master's in mechanical engineering and his doctorate in the study of plasma physics, the basic science behind fusion. That's how he ended up essentially a rocket scientist.

Applying Physics

After getting his doctorate, Izzo joined the renowned Princeton Plasma Physics Lab and worked there for about five years. One of the assistant directors at the lab was quite active in something called the American Physical Society, an association of physicists. She asked Izzo if he would have an interest in spending a year in Washington to pursue something called a congressional science fellowship. 

Izzo likes to think that she thought of him because she had heard him present or noticed his interest in the policy implications of the research. You don't go through two oil shocks, seeing what it did to the nation and to economic security, without getting interested in these topics. So, he went to Washington for a year and worked for the then Senator of New Jersey, Bill Bradley (the former basketball star of the New York Knicks).

During that year, Izzo fell in love with public policy. It was an incredibly powerful experience for him. The Senate passed an amendment that banned the use of lead in potable water systems. Then passed another that increased the amount of funding to the World Health Organization for diseases that were killing unimmunized children in the developing world. They also tried legislation related to synthetic fuels, but it wasn't successful. Izzo began to see the immediate impact of public policy on people's lives and how it could be a force for good.

Izzo came back to the lab at Princeton after his one-year fellowship with a much better understanding of public policy and the mechanisms in Washington. But he also had a new personal struggle. Fusion was this wonderful way to save the world, but it was still an elusive twenty years away. Izzo now knew how important it was to effect the kinds of changes that would be embraced by other members of whatever legislative body he was working in.

Advising Legislators

While Izzo had worked for a Democratic senator, the New Jersey governor at the time, Tom Kean, was a Republican. Kean had just been re-elected for a second term and was starting a policy office. Knowing that Izzo was not partisan, the office reached out to him through Senator Bradley's office and asked if he would be a science and energy advisor.

It was a major career change for Izzo. He decided to do it because he thought he could have a greater immediate impact on what mattered to him. When he started with Kean, climate change was just coming to the forefront. 

Kean embraced a model of thinking globally but acting locally. Izzo's work with him tried all sorts of strategies in the realm of reducing, reusing, recycling to become a more efficient economy from an environmental point of view.

Piloting PSEG

In 1992, when the governor's term ended, Izzo came to work at PSEG. He fully intended on staying from two to three years. He meant to gain the experience he needed to be a better public servant. He saw himself eventually returning to government work, some appointed position. Thirty years later, he found he never managed to get that government job that he wanted. 

The first ten years of his career with PSEG were dominated by the question of whether the industry should be regulated and what it would look like. Then, in the middle of his career, in 2004, PSEG initiated a merger with Exelon, which was — and still is — a world class nuclear operator. PSEG at the time, however, was having some trouble with its nuclear operations. 

They tried for two and a half years to consummate a merger, but it was not to be. The merger fell apart in 2006, and a year later, Izzo was named the Chairman and CEO of PSEG, which would remain distinct from Exelon.

It turned out to be an amazing turnaround in PSEG's future. When Izzo took over in 2007, natural gas prices were five dollars per million Btu and climbing. PSEG's unregulated operations were extremely strong, and the utility was a solid reliability performer. This was largely due to the strength of the network's design, developed by multiple generations over the twentieth century. The company, however, couldn't invest heavily in the utility because of the bill pressure associated with rising natural gas prices and what that meant for the supply part of the bill.

He does indeed believe that necessity is the mother of invention. As Izzo looked ahead, he saw two things coming at them with a fury that mobilized him to action. There was technology bending the price curve for natural gas, the fracking revolution. And there was the financial crisis starting to create some serious cracks in the economy. 

He knew it would mean several things. First, nuclear power, which was about sixty percent of PSEG's output, would no longer be as profitable as it had been on a per kilowatt-hour basis if natural gas prices plummeted as they were projected to. 

Something had to happen. Izzo and his team got started talking to senior governmental leaders and union leaders. In partnership, they adopted an ideology of not being distracted by the beautiful vision in the rear-view mirror when you're driving straight into a storm. 

Their strategy served them well from 2007 to 2008, but after that Izzo and his team continued encountering challenges. Again, based on commodity price direction and economic issues. It was time for another shift. It was the chance to invest in an aging infrastructure, which was in desperate need of replacement, amidst a declining bill environment. 

They had relied on the superior design of the grid and benefited from it in years past. Even that design though wouldn't hold up against time and deteriorating conditions. They also had not forgotten the lessons of 2003, the Northeast blackout that year specifically. There was more work to do to make sure that never repeated. 

Collaboration among their regulators, union leaders, and management teams greatly accelerated investment in the utility. Izzo and his team later realized they could improve the infrastructure while bills declined. Now, it wasn't a sharp decline, but the case could be made for improvements. Although this was a unique set of circumstances, history could repeat itself. This was the catalyst for a massive growth program for infrastructure replacement in the utility that lasted ten years.

Standing Up to Storms

Throughout this period, the effects of climate change were getting worse and worse. The only aspect the science has gotten wrong about climate change was the speed with which it would be upon us. 

The region was first hit with Hurricane Irene in August 2011, and later an unprecedented snowstorm around Halloween. Then, in October of 2012, they were hit by Superstorm Sandy.

That's when PSEG launched a series of programs, which together were called Energy Strong. Not only was it replacing aging infrastructure, which had been going on for over four years already, but it was also working to recognize weather pattern intensity. The company was looking for what it needed to do differently, whether the infrastructure was old or not. 

Over the course of several storms, there were around thirty substations that had taken on so much water that millions of customers lost power. PSEG began either shutting them down or hardening them, waterproofing them by lifting them up. 

Just last summer, another terrible storm, Hurricane Ida, hit New Jersey and even claimed lives. A number of people tragically died because of flooding. However, none of the substations lost power due to flooding.

Looking to the Future

According to Izzo, PSEG's key strategy has been looking far enough into the future on issues critically important to stakeholders. In this industry, many companies have the benefit of being over a century old. But if you were to ask people, what is the one word you can use to describe this industry? You'll get a lot of different answers. However, Izzo believes the consensus opinion would be "reliable."

It's the notion of sustained reliable operations, sustained reliable dividends, sustained reliable employment opportunities. This ideology of sustained and reliable service is pervasive among all of the utility's stakeholders. What PSEG tries to do is make the case in those terms to each of its stakeholders. To tell them about why they're doing what they're doing. To Izzo, that's the most important thing a leader can do.

He couldn't be prouder that through a financial crisis, a commodity cycle, and a global pandemic, PSEG has not laid anyone off. They've taken advantage of attrition, managed expenses, but never had to resort to what many industries have had to do. 

Similarly, for its customers, PSEG maintained top performance in reliability measures and has remained the most reliable electric utility in the region for nearly twenty years. All this while bills went down by thirty percent. 

For Izzo, it's all about being focused over the long-term on what matters to your people, whoever they are and whatever role they play. Because that's what leadership is about.