June 30, 2004—According to new survey results co-published by Navigant Consulting, Inc. and Electric Perspectives magazine, executives in the electric power industry believe regulatory uncertainty, system reliability and aging physical infrastructure are the three most critical issues that need to be resolved to strengthen the industry’s future. Additionally, the executives surveyed believe that these issues are closely linked and will be extremely difficult to fix without solving all three simultaneously.
The results of the Navigant Consulting/Electric Perspectives survey, titled “The Outlook for the North America Power Industry,” were taken from responses from a wide range of utility industry executives who represent electric utility companies (63 percent), gas and combination utilities (20 percent) and a mix of technology developers, municipal operators, state/federal agencies, attorneys and financial executives. The results were published in the May/June issue of Electric Perspectives, the Edison Electric Institute’s magazine for management in shareholder-owned electric companies.
Fully 72 percent of the executives surveyed said that regulatory uncertainty is the “most critical” issue to resolve, followed by 67 percent who said “system reliability” and 56 percent who cited “aging physical infrastructure.” In total, 70 percent of the executives cited 14 different industry issues as “highly critical” or “critical” to solve in the next three years, supporting the underlying message that it is difficult to separate one issue from another.
“In an industry with wide variance in regional market structures and where questions remain on the role of utilities in future power supply and transmission system additions, we are not surprised that power executives identified regulatory uncertainty as the biggest issue to solve—but that takes a big toll on the industry,” said Ron Nichols, Senior Managing Director, Navigant Consulting. “In fact, that uncertainty has been undermining strategic growth plans, driving up the cost of capital, and arguably affecting the industry’s ability to provide more reliable service.”
According to 86 percent of the executives, the strategic option that will contribute most to utility company growth over the next five years is a “back to basics” approach. “Cost/performance improvement” also figured high (77 percent) as an important strategic option.
Sixty-four percent of the executives surveyed believe that the power industry understands the value of new technologies and, even in today’s financially difficult environment, more than half of the executives believe that the industry will make investments in technology and innovation in the near future.
For more information, contact Navigant Consulting.
