It was a "classic" publicity event-long on vision, but short on substance. There he was, the Secretary of the Department of Energy (DOE), Spencer Abraham, standing toe-to-toe with each of the...
gross domestic product (GDP).
According to EIA, the output of the nation's economy, measured by GDP, is projected to grow by 3 percent per year between 2002 and 2025 (with GDP based on 1996 chain-weighted dollars; the term "chain-weighted" indicates that the relative proportions of goods that make up the GDP market basket are revised continuously). With that, one can see that the industry's greatest infrastructure build is ahead. But what type of power plants should be built? How will the transmission lines be sited? Where will the plants be sited? How is it going to be financed? What about environmental restrictions? Without question, the utility industry of the 1900s had it easy compared with that of the 21st century.
The Future: Is It Now?
Skeptics may say that I'm too early in sounding the alarm. After all, the present industry continues to retrench while working through a surplus of capacity that has shrunk its financial prospects (). And the prospect of rising interest rates threatens to challenge utility company valuations in the next few years.
But the best time for action is now, while the industry still enjoys a margin of safety against tomorrow's demand growth.
Increasing total installed capacity by 50 percent would require billions upon billions of dollars for new plant and transmission development. It would require consistent and expedient siting rules, and significant agreement and coordination between states and the federal government on myriad issues the magazine has covered many, many times.
It also would require a national policy developed by the president and Congress that specifically outlines a resource plan for the future and that has the backing of the nation. Regrettably, in most cases there has been only minor progress on any of these issues.
But to progress would require the industry, its federal and state regulators, Congress, financiers and rating agencies, environmentalists, and the nation to act in unison in an unprecedented way. Compromises would have to be made, as with any common goal with so many different actors. Such compromise has been lacking in the national dialogue on energy policy development.
Those familiar with the regulatory and financial bottlenecks to the development of a truly modern utility industry will understand that at the pace we are going, it could be decades before the right rules and financial incentives are in place. The consequences of not acting now could be catastrophic for the nation.
In this issue, we look to the stars. Where are the industry's new leaders going? (). What technologies will they need to get there? (). How will they pass their knowledge and experience to a new generation of leaders? ().
The Heisenberg Uncertainty Principle in its societal interpretation states that the simple act of observation will change what is being observed. In outlining some of the future challenges of the industry in the following pages, I hope I have begun the process of doing just that.
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