New York, May 24, 2010 — A survey of the more than 100 executives within the U.S. and Canadian electric and natural gas industries shows that some 80 percent are dissatisfied with the U.S. government’s energy policy performance following the one-year anniversary of President Obama’s inauguration and amid a slowly rebounding economy.
The annual survey, now in its fourth year, is conducted by Capgemini, a provider of consulting, technology and outsourcing services, in cooperation with Platts, a global supplier of energy and metals information.
“While utility industry executives are generally pleased that the Obama administration has stimulated conversation around energy and sustainability, and that they have invested in a number of initiatives through the economic recovery package, there is considerable dissatisfaction in the lack of tangible and actionable policy and legislation,” said John Christens, vice president, Smart Energy Services, Capgemini.
“Few utility executives consider the current solutions as satisfactory either in scale or feasibility. Specific concerns cited by executives included a lack of movement on greenhouse gas legislation and action, regulations which will increase the cost of power without addressing the root issue of atmospheric carbon, and overly idealistic policies without adequate consideration to overall economic impact,” Christens said.
The Platts/Capgemini Utilities Executive Study is designed to identify and prioritize current industry concerns, assess opinions about the future of the energy industry, measure the steps utility companies are taking to prepare for the future and gauge perceptions about the Obama administration’s impact on the energy industry.
Despite these concerns, utility executives indicated that the Obama administration has succeeded in stimulating dialogue about the energy industry in general and about specific sustainable solutions, such as wind and solar energy. Respondents also cited the administration’s stimulus package as a positive accomplishment.
Completed in March of 2010, the study revealed that the five most critical issues facing the energy industry include:
* Addressing financial concerns such as cost recovery, access to capital and maintaining liquidity; and
* Providing satisfactory service for cost and “Ëœgreen’ energy to end users
Regulatory uncertainty and environmental concerns
According to the study, utility executives cite regulation (71 percent) and the environment (68 percent) as the top challenges facing the industry today. Specifically, emissions and carbon regulation (75 percent), lack of adequate national energy policy (52 percent) and uncertainty about transmission regulation (50 percent) were ranked as the most salient issues by senior utility executives with respect to regulation.
Among key findings relating to the environment, executives reported that building generation transmission capabilities to support renewable energy sources and increasing energy efficiency and customer conservation programs were the most significant issues — 42 percent of respondents ranked both issues as “very important” on rating 9 or 10 on a 10 point scale.
Incorporation of technology as a priority
Promoting technology into utility business operations is the third leading concern for executives (38 percent identify this as a top-3 issue), and has replaced “infrastructure” since last year’s study.
Nearly half (45 percent) of respondents indicated they have a smart grid strategy currently in place and 52 percent said one is under development. More than one-third of industry executives report having full implementation of smart meters (37 percent) and AMI technology (35 percent).
Financial concerns and end user issues recognized across the industry
Other salient issues voiced by energy executives include finance and end user issues, which rank as the fourth and fifth leading concerns respectively.
As the U.S. economy slowly climbs out of the recent downturn, utility executives surveyed cite concern around cost recovery (60 percent), access to capital (52 percent) and maintaining liquidity (48 percent) as top financial issues.
Citing concerns about end user issues, executives were most concerned with maintaining customer satisfaction (64 percent), followed by providing consumer education about the cost of “Ëœgreen’ energy (48 percent) and end user’s expectations for continued low energy costs (42 percent).
“Despite ongoing economic and political concerns, energy and utility companies are moving forward, identifying areas for constructive action and adopting technologies to further enhance energy efficiency solutions and alleviate environmental challenges,” said Tia Hensler, Platts director of market intelligence.
Future concerns and projections
In looking toward the next five to ten years, 70 percent of utility executives strongly agree that there will be an increase in electricity prices for end users, increasing environmental regulation (63 percent) and increased implementation of AMI and automatic meter reading (AMR) technology (51 percent). Additionally, 48 percent of respondents foresee an increase in wind, solar and biomass in the overall fuel mix within the next one to two years.
Platts, a division of The McGraw-Hill Companies, is a global provider of energy and metals information. With a century of business experience, Platts serves customers across more than 150 countries. An independent provider, Platts serves the oil, natural gas, electricity, emissions, nuclear power, coal, petrochemical, shipping and metals markets from 17 offices worldwide.