Policy and technology changes are re-shaping the utility business model.
Michael J. Beck (firstname.lastname@example.org) is managing director and founder of M.J. Beck Consulting, based in Cherry Hill, N.J., and formerly held senior positions with Hagler Bailly and PA Consulting. William Klun (email@example.com) is a finance specialist with the firm, and formerly was vice president and co-head of DZ Bank’s energy corporate finance group.
Electric utilities are at the confluence of once-in-a-lifetime economic, technology and regulatory forces that will, over time, re-shape the utility business model.
The demonstrable need for massive investment in electricity delivery infrastructure, along with the construction of new, clean production technologies, presages enormous cost pressures on ratepayers—and the utilities that serve them. These pressures, if acknowledged at all, are given short shrift in current discussions, largely because the full ramifications of added delivery investment and production cost increases will not be apparent for a number of years. Other factors conspiring to hinder discussion include the political clamor for immediate job creation (or at least retention), continued uncertainty around major elements of energy and regulatory policy (e.g., climate-change legislation, carbon pricing, renewable energy standards), extremely tight credit and capital markets, and the anticipated, but always difficult to predict, impact of technology development.