Key findings from Black & Veatch’s seventh-annual U.S. electric utility industry report show rising levels of concern across the industry for a broad range of issues. Once again, reliability was the top-rated industry issue.
“This year’s report reflects the views and outlooks of an industry in transition,” said Dean Oskvig, president of Black & Veatch’s global energy business. “From the lack of clarity in energy policy to disruptive effects of unconventional gas supply, major shifts are occurring just as the industry embarks on a new round of unprecedented capital spending addressing concerns over aging infrastructure, reliability and resilience.”
The “2013 Strategic Directions in the U.S. Electric Industry Report” focuses on factors impacting utility operations, power generation and power delivery:
- Predictable recovery of operating and capital costs through appropriate economic regulation jumped from ninth to third on the Top Ten Industry Issues list.
- Carbon regulation is top of mind with more than 70% of respondents expecting action — either state or federal — within the next eight years.
- Most utilities are planning to start or expand smart grid programs in 2013. However, the industry continues to struggle with justifying program costs to regulators. Competing capital investment programs also represent a major challenge.
- Low natural gas prices are expected to stimulate significant new demand for the commodity. However, many industry leaders, particularly in the Northeast, remain concerned about local volatility in gas prices and long-term price certainty. Gas transportation, its availability and reliability, is also seen as a potential weak link in the fuels value chain.
- Only 3.4% of respondents believe that meeting renewable portfolio standards (RPS) is not achievable because of technical considerations. However, opinions still vary widely on the ultimate rate impact consumers will have as a result of meeting RPS.
- Distributed generation, that is, power generating assets with a capacity of less than 20 MW often located close to end users, is growing in popularity. Low gas prices and rising conventionally generated electricity costs are improving the business case for industrial and manufacturing companies to produce electricity themselves on their premises.
Black & Veatch conducted the annual survey from Jan. 30–Feb. 18, 2013, receiving 607 responses including 376 from utility leaders. Analyzed survey responses are from qualified electric utility industry participants.