[BETA] Fortnightly

How will the industry change in the future?

The utility industry of the future can be best characterized by three words: scale, synergies, and automation. Company leaders and the broader workforce will be touched by these three forces for change. We can already see glimpses of the future around us today. In response to the sweep of deregulation, many power companies no longer generate power. They have divested themselves of their generating plants, ceding that ground to independent producers to concentrate on distribution.

Formerly independent, self-sufficient, and monopolistic, utilities find themselves pulled increasingly into regional transmission networks designed to distribute and even-out the flow of power to increase both grid reliability and competitive accessibility.

And perhaps most importantly, by virtue of huge leaps forward in technology, utilities today are exploring products never before envisioned for their power lines-voice, image, and data communications, and a host of other marketing opportunities opened up by two-way communications with customers. This latter trend could well prove to be the most significant and far-reaching.

The utility of tomorrow may be one that controls connectivity to the home or business. The push toward deregulation gave birth to this vision, on the theory that competing companies would maximize revenue by offering as many products and services as possible over their lines. To date that trend has been slow to develop, but it will accelerate.

Extending the vision further, the utility of tomorrow may evolve beyond anything we know today if a hydrogen economy takes hold, as many predict. More relevant and potentially disturbing to utilities, under some scenarios, individual hydrogen units at each home and business will provide power and heat. Utilities, with their expertise in fuel and components, will be in the business of maintaining the hydrogen units and supplying equipment and parts. Power-line capacity then becomes an under-utilized asset or even eventually goes the way of the dinosaur.

Electricity as the Elixir of Life

"Electricity is the engine of prosperity and quality of life. It's not just a dumb energy commodity," says Kurt Yeager, president and CEO of the Electric Power Research Institute.

Those creating the utility of the future will be influenced by the fact that all decisions regarding electricity must be factored into what Yeager calls a "trilemma" reflecting three dimensions-economics, politics, and technology.

"A policy is doomed to failure when focused on only one area of the trilemma," Yeager says. "Electricity is viewed as a political entitlement, like air and water. Politicians will protect that right."

The current fragmentation in public policy for utilities gives utility executives a chance to help shape the industry's direction. Policy-makers need to understand the market mechanisms, and political leaders want to know that the decisions they make will keep the lights on. The industry can assist these regulators in understanding the choices.

Playing such an essential role for society, utilities will need to stay nimble-perhaps not a word associated with the power industry in the pre-deregulation era-to adapt to the rapidly changing conditions and carry out their mandate.

As with all high-performing businesses in the era of change,