Utilities sector faces adjustments, study claims

Published: Wed 21 Aug 2013
A blog entry by Gisele Lee

Contributed by:

Gisele Lee
bank manager

Gisele Lee's Blog

The sixth annual Strategic Directions in the U.S. Electric Utility Sector Survey from the consulting and construction company Black & Veatch was released on June 4. It displays an industry on the brink of change. Resource for this article: Industry in Transition

Industry is changing

Right now, the utility industry is beginning to change because of adjustments in renewable power sources and cleaner technology. There are different environmental regulatory standards that have to be met, and these help with the changes.

Auto industry experts agree with the 500 utility professionals who pointed out there is a massive change in the industry. This is due to concerns about sustaining natural resources and fewer fuel reserves.

As the Black & Veatch’s management consulting division president, John Chevrette explained:

"Utilities are evolving in a manner that will redefine core functions such as power production, distribution and customer service. Driven by new technology and regulatory shifts, we are seeing the impact across all aspects of the electric industry."

Higher bills to pay

Nearly all the professionals surveyed -- 90 percent -- believe that federal laws and standards will increase the monthly utility charge for every-day Americans. Half of those said the increase would be significant.

About $111 a month for power is the average amount paid for the typical American household, according to the U.S. Energy Data Administration.

About 11,000 lives will be saved annually because of the change in laws and standards, according to the EPA.

Possibility of limiting fracking

When asked about laws limiting fracking, or the extraction of natural gasoline from shale rocks, 70 percent of the professionals said they would only raise the price of natural gas slightly. Twenty-three percent disagreed, warning of significant increases in monthly bills.

Smart power grid around

One very wise way to provide power to communities is through a smart power grid. This type of grid technology is not common in the United States because customers are either ignorant or do not care all that much. The smart power grid can collect, process and change data for different communities.

What is good for the globe?

The professionals were not too happy about the idea of alternative energy sources in the past, but now over two-thirds like the idea of making a profit off of them. Green technology and programs are becoming more prevalent because executives see where they can make some cash.

The survey saw bio-mass technology as the most hopeful environmentally-friendly power source, followed by solar, hydro-electric, natural gasoline and nuclear power.

The conclusion of the report pointed out that executives need to be prepared for change in the sector and keep their eyes on it:

"The combination of a persistently sluggish economy, growing environmental concerns and uncertain regulatory outcomes, is creating the greatest earnings pressures in recent memory. Moving forward, utility leaders must balance the competing needs of sound financial performance and increased regulatory requirements while striving to exceed customer expectations."