Changing corporate strategy is more difficult for utilities than for companies in many industries. Success calls for leadership on seven fronts.
After EPACT: A Mad, Mad Scramble for Talent
The Energy Policy Act of 2005 makes human resource challenges even more significant.
utility is at best a black art managed by a small cadre of engineers who are evolving exponentially into the realm of endangered species. Who will design and build these systems across companies, regions, and RTOs? Where is the United States is going to find that type of expertise?
Looking for Nuclear Engineers
Global warming and the war in Iraq have put a spotlight on energy vulnerability in the United States. Congress, in response, has taken the unusual step of guaranteeing the loans on the first six nuclear plants built.
After the 1979 accident at Three Mile Island, the nation walked away from the nuclear option. Twenty-five years later this nation has a very limited nuclear design capability. The demographic challenge is encroaching on the operating units (many of whom recently have received life extensions), the Nuclear Regulatory Commission, and the Institute of Nuclear Power Operations. One must remember that during the building boom of the 1970s and 1980s the nation was in the midst of a Cold War and the nuclear fleet well exceeded 120 vessels. Today’s fleet is but a fraction of the fleet built during the Cold War.
The establishment of the ERO introduces a new set of variables. The biggest human resources (HR) challenge will be cultural. Transitioning NERC and the regions from a collegial utility driven organization into a quasi regulatory role charged with the responsibility of enforcing an entire spectrum of tough new regulations will not be a simple task. Congress recognizing the difficulties at hand, has allowed the government to take on this task, should the industry fail to realize the objectives.
Mergers to the Rescue?
Implementation of the repeal of PUHCA will challenge leadership. The recent announcement of the Florida Power and Light (FP&L) and Constellation merger will be the first real case study for the industry. Both companies are very well managed, each with their own leadership styles and related cultures.
Therein lies the HR challenge. The integration of equals can be difficult. There will be winners and losers. Organizational models and job design will be key. FP&L, which will take on the Constellation name, will need to let go of its successful branding. For the employees and the local politicians, this is no small concession. This is quite different from FP&L’s acquisition of the Seabrook nuclear plant, the result of regulators directing Northeast Utilities to sell off its assets.
Mergers sound easy to accomplish, but as we saw with the formation of Exelon, there were real winners and real losers. Leadership at all levels will be a key determinant of merger success. The huge number of industry retirements in the next few years won’t tell the whole story. Those retirees represent 60 percent of the industry’s knowledge base and 70 percent of the leadership, so many of the people who could facilitate the integration of these companies simply won’t be there.
The Transition Team is History
During the industry downsizing in the 1990s, most HR and technical training functions were reduced significantly. Today these organizations are ill positioned to address the impending