Can utilities survive the winds of change buffeting their world?

Executive Summary

The U.S. electric utility industry is experiencing dramatic changes in technology, marketing and energy policy that are altering the business in ways unseen since the time of Thomas Edison. Technological advances and tax credits are spurring investment in renewable energy sources such as wind and solar. Politics and policy—along with historically low natural gas prices—are moving the industry away from coal, its traditional fuel of choice since at least the 1950s. While the power companies are diversifying their fuels, they are under siege from new competitors, potential cyberattacks on the grid and flat electricity growth. New firms with roots in Silicon Valley are marketing home-based solar systems that could cut the utilities out of the residential market. Among the questions under debate: Will traditional utilities continue to dominate the industry? To make energy efficiency and conservation pay, must utilities charge consumers differently? Is expansion of renewable energy the industry’s best new business model?

Looks like you do not have access to this content.

Please login or find out how to gain access.

Resources

Bibliography

Books

Borlase, Stuart, “Smart Grids – Infrastructure, Technology, and Solutions,” CRC Press, 2012. Written by a business development professional who has worked for GE and Siemens, this book offers perspectives on what a smart grid is and where the technology is going. It features a number of experts discussing smart grid technology.

Hirsh, Richard F., “Power Loss: The Origins of Deregulation and Restructuring in the American Electric Utility System,” MIT Press, 1999. An associate professor at Virginia Polytechnic Institute and State University explores the origins of deregulation and restructuring in the U.S. electric utility industry.

Hirsh, Richard F., “Technology and Transformation in the American Electric Utility Industry,” Cambridge University Press, 1989. The author provides a thorough history of the U.S. electric utility industry from the days of the holding companies through the 1980s.

Lambert, Jeremiah D., “The Power Brokers: The Struggle to Shape and Control the Electric Power Industry,” MIT Press, 2015. An author and attorney details the struggle to shape and control the electric utility industry in the United States.

Articles

Finn, Bernard S., “Origin of Electrical Power” in “Powering the Past: A Look Back,” Smithsonian Institution, 2002, http://tinyurl.com/znwyxk5. The curator emeritus of the electricity collections at the Smithsonian Institute provides a detailed history of the early days of electric power generation, including historical photographs and drawings.

King, Gilbert, “The Rise and Fall of Nikola Tesla and His Tower,” Smithsonian.com, Feb. 4, 2013, http://tinyurl.com/mshuwrz. An examination of Tesla’s life and accomplishments, including his complex relationships with Thomas Edison and George Westinghouse.

Lowenstein, Roger, “Before There Was Enron There Was Insull,” The New York Times, March 19, 2006, http://tinyurl.com/zdxd4qp. A book review of a biography of electric utility pioneer Samuel Insull.

McKibben, Bill, “Power to the People,” The New Yorker, June 29, 2015, http://tinyurl.com/olht8rw. A long feature that details some of the disruptive changes happening in the U.S. electric utility industry as seen through the eyes of utility executives and customers.

Mooney, Chris, “Why clean energy is now expanding even when fossil fuels are cheap,” The Washington Post, Jan. 14, 2016, http://tinyurl.com/zsz5q8u. The writer interprets data provided by Bloomberg New Energy Finance regarding the future of renewable energy.

Rather, Jon, “Planning the Fate of a Nuclear Plant’s Land,” The New York Times, Jan. 1, 2009, http://tinyurl.com/julvftz. A look at the demise of an abandoned nuclear power plant in Shoreham, N.Y., on Long Island and possible outcomes for the property

Trabish, Herman K., “Partnering for success: Utilities leverage innovative vendor relationships at the grid edge,” Utility Dive, Feb. 23, 2016, http://tinyurl.com/gmeeea9. A roundup of what’s happening in the utility industry arena.

Walsh, George M., “Driven by power outages and savings, towns look to microgrid,” The Associated Press, Feb. 7, 2016, http://tinyurl.com/zzhp4op. Small towns seeking to add resiliency to their electric systems and emergency preparedness are expanding their use of microgrids.

Warrick, Joby, “Utilities wage campaign against rooftop solar,” The Washington Post, March 7, 2015, http://tinyurl.com/np4nncn. A look at the different sides of the discussion swirling around rooftop solar and how the issue is affecting the utility industry.

Reports and Studies

“Business Blackout,” Cambridge Centre for Risk Studies, May 2015, http://tinyurl.com/ojbq9g8. An examination of what could happen as the result of a successful cyberattack on the U.S. electric grid. Prepared by Lloyds of London and Cambridge University, the report examines possible outcomes and financial costs of a fictional attack on the grid, based on real-world possibilities.

Kind, Peter, “Disruptive Challenges: Financial Implications and Strategic Response to a Changing Retail Electric Business,” Edison Electric Institute, January 2013, http://tinyurl.com/khjxbfx. The report by a leading industry group provides a candid look at how the utility industry perceives the changes affecting its survival.

Sweeny, James L., “The California Electricity Crisis: Lessons for the Future,” National Academy of Engineering, Summer 2002, http://tinyurl.com/hfmawel. An in-depth study of what went wrong with California’s experiment with utility deregulation and the lessons it holds.

The Next Step

Coal Power

Downing, Bob, “FirstEnergy reiterates its reliance on coal alongside green initiatives at annual meeting,” Ohio.com, May 16, 2016, http://tinyurl.com/jgbtq8m. Despite shutting down three coal-fired power plants in Ohio last year, FirstEnergy Corp.’s president and CEO said coal remains an essential part of the Akron-based utility’s plans.

Nikolewski, Rob, “California’s Coal Collapse,” San Diego Union-Tribune, May 5, 2016, http://tinyurl.com/j8up4sh. Two new U.S. Energy Information Administration reports show California’s use of coal to generate electricity has dropped dramatically.

Sweet, Cassandra, “U.S. Utilities Boost Investments in Wind, Solar Power,” The Wall Street Journal, May 9, 2016, http://tinyurl.com/hpa52x8. Utilities increasingly are turning to government subsidies to produce more energy from wind and solar sources in anticipation of stricter regulations on carbon emissions from coal plants.

Effects of Solar

Roth, Sammy, “No relief for east valley as Assembly kills solar bill,” The Desert Sun (Palm Springs, Calif.), May 27, 2016, http://tinyurl.com/hlhmmwx. California’s Assembly killed a bill that would have required a Southern California agency to let thousands more customers enroll in a “net metering” program that compensates solar-powered homes and businesses for the electricity they generate.

Vitter, Scott, and Thomas Deechen, “How to Overcome the Greatest Barriers to Rooftop Solar Power,” Scientific American, June 8, 2016, http://tinyurl.com/zs9fxp4. San Antonio’s municipal utility is pioneering a project that allows homeowners to apply for free solar panel installation in exchange for leasing their rooftop to the utility and receiving discounted electricity rates.

Worland, Justin, “Your Utility Company Wants to Sell You More Than Just Electricity,” Time, June 3, 2016, http://tinyurl.com/j3xqwf4. Utility companies in states with regulations that are favorable to solar energy are considering selling and marketing solar panels themselves.

Natural Gas

Levit, Donald, “Natural Gas Prices Soar to Five-Month High,” EconomicCalendar.com, June 6, 2016, http://tinyurl.com/hutwjaq. A recent heat wave across many states has increased electricity demand and led natural gas prices to soar to a five-month high.

Maykuth, Andrew, “N.J. utilities give customers a shale-gas windfall,” Philly.com, June 2, 2016, http://tinyurl.com/gwejzck. New Jersey utility Public Service Electric & Gas. Co. proposes to reduce residential gas bills by 7.4 percent, saving customers an estimated $64 per year.

Walton, Robert, “EIA: Constructing a natural gas plant is cheaper than other options,” Utility Dive, June 7, 2016, http://tinyurl.com/gqod5fx. A utility industry website says natural gas’ dominance over other forms of energy extends past its historically low prices: Its plants also are among the least expensive to build.

Security Risks

Bo Williams, Katie, “DHS Cyber Reorganization Bill Advances in House,” The Hill, June 8, 2016, http://tinyurl.com/go8dw33. The House Homeland Security Committee approved a bill that would restructure how the Department of Homeland Security guards against computer-based threats to utilities and other critical infrastructure.

Eber, Kevin, “NREL’s New Initiative to Prevent Hackers on the Grid,” T&D World Magazine, June 8, 2016, http://tinyurl.com/zud6s22. A new initiative at the National Renewable Energy Laboratory—a privately operated Colorado-based center for energy research funded through the U.S. Department of Energy—seeks to prevent computer hackers from gaining control of parts of the nation’s power grid, which could damage electrical equipment as well as spur power outages.

Organizations

American Public Power Association
2451 Crystal Drive, Suite 1000, Arlington, VA 22202
202-467-2900
http://www.publicpower.org
Organization representing more than 2,000 community-owned electric utility companies.

Edison Electric Institute
701 Pennsylvania Ave., N.W., Washington. DC 20004
202-508-5000
http://www.eei.org/Pages/default.aspx
Industry group representing all U.S. investor-owned electric companies. Provides public policy leadership, strategic business intelligence, organizes and hosts conferences and forums.

Federal Energy Regulatory Commission
888 1st St., N.E., Washington, DC 20426
202-502-6088
http://www.ferc.gov/default.asp
Independent federal agency that regulates the interstate transmission of electricity, natural gas and oil. Mission includes “assisting consumers in obtaining reliable, efficient and sustainable energy services at a reasonable cost through appropriate regulatory and market means.”

National Rural Electric Cooperative Association
4302 Wilson Blvd., Arlington, VA 22203
703-907-5500
http://www.nreca.coop
The national service organization for more than 900 nonprofit rural electric cooperatives and public power districts in the United States.

North American Electric Reliability Corp.
3353 Peachtree Road, N.E., Suite 600, North Tower, Atlanta, GA 30326
404-446-2560
http://www.nerc.com/Pages/default.aspx
Nonprofit organization whose mission is to assure the reliability of the bulk power system in North America. Its area of responsibility spans the continental United States, Canada and the northern portion of Baja California, Mexico.

Solar Energy Industries Association
600 14th St., N.W., #400, Washington, DC 20005
202-682-0556
http://www.seia.org
The U.S. trade association for solar energy and related businesses, focused on expanding domestic and international markets and advocating for the expansion of solar power.

U.S. Department of Energy
1000 Independence Ave., S.W., Washington, DC 20585
202-586-5000
http://energy.gov
Federal agency in charge of researching, establishing and implementing U.S. energy policy.

U.S. Environmental Protection Agency
1200 Pennsylvania Ave., N.W., Washington, DC 2004
202-564-4700
http://www3.epa.gov
Federal agency charged with protecting human health and the environment.

DOI: 10.1177/237455680213.n1