UTILITIES UNDER PRESSURE

Sluggish Economy Places Financial Pressure On Utilities

13 June 2012 (Renew Grid)

“Like many others in the U.S., utilities are very concerned about financial issues and their ramifications, according to Black & Veatch's sixth annual Strategic Directions in the U.S. Electric Utility Industry report…[C]urrent and emerging financial issues will largely be affected by the need to invest in operational technologies and competitive generation resources, as well as environmental and regulatory compliance programs.

“Strong financial planning continues to be necessary in order to gauge economic risk from factors such as smart grid investments, capital spending programs, the potential for cessation of production tax credits and distributed renewable energy generation…”

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“Utility respondents report that cost-cutting measures are in place, and more than two-thirds say these measures are having a detrimental impact on operational effectiveness. In the face of upward cost pressures, it appears that utilities will continue to look inward for additional savings while expanding technology investments. Approximately 75% of respondents indicated that cost-cutting gains must be shared, in part or in whole, with customers...

“Reflecting the impact of several major government-sponsored initiatives and significant private investment, overall renewable energy generation has doubled over the last five years, while electric load growth has remained flat…[C]ontinued growth in renewable energy generation will be driven by renewable portfolio standards…Growing industry confidence in renewable energy generation - and the ability of these technologies to address a broad array of electric industry concerns…”

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