Electromagnetic terrorism has huge implications for the international power industry. The North American electric power network is vulnerable to electronic intrusions launched from anywhere in the...
at the root of everything in the U.S. economy and society. Everything depends on it. Nothing is separate from it. As the electricity infrastructure goes, so goes the nation. So the key issue to be resolved is: Will the system continue to be the critical infrastructure for the 21st century, or will it be left behind as another industrial relic? I would suggest that the industry and the nation cannot afford to let the latter case be. There is no option. The country will continue to depend, and in fact increasingly depend on its electricity infrastructure. There is no alternative source of electricity that can be plugged into homes or businesses that will in any way provide the resources needed to run this country in the future.
Distributed energy sources are great, but they are no panacea. In fact, they work best and most reliably as part of a network. They should be an integral part of the grid.
So the industry is at an inflection point, a fork in the road. Utilities are at a point where they must provide transformative leadership. Continuing the is not feasible. The industry typically goes through such an inflection point in its life-cycle about every 35 years. For example, the Public Utility Holding Company Act (PUHCA) coincided with such a change. This is not to say PUHCA was the root of why there was rapid growth, but it was a point in time, an event if you will, that marked a transition. From then until about 1970 there was major growth and consolidation of the industry. In 1970 all that changed. There were no longer declining rates. Demand was slowing. There were new environment rules, and fuel costs were going up.
For the last 35 years utility executives have been trying to maintain the traditional declining-cost commodity business model in the face of pressures that really can't be withstood anymore. And that has culminated in the financial crisis that the industry has faced for the last several years.
The industry is now at the point where it must either transform or decay. And it's not just the industry, it's the nation. Transformation is tough business. It's easy to talk transformation, but whether you're an individual, a company, or an industry, transformation is the toughest thing you can do-and you usually don't do it unless there is no other option. Utilities need to look to innovation to transform their business as well as the service value of electricity.
The electric system today is the last vestige of the 20th century analog industry, which is ironic; electricity drives the digital revolution, but the industry providing it is forced to use analog switches and relays that Thomas Edison would recognize. They're bigger and more sophisticated, but they don't operate any faster or more precisely.
Utilities need to increasingly integrate electricity and communications, whether for the last millimeter, the last mile, or the last 100 miles. At the end of the day, whether at home or business or wherever, the world is going to be managed by