Survivingthe
‘Crash&Burn’Economy
StrategicdirectionsintheUSelectricutilityindustry.
By Stephen Stolze
A
globalrecessionisuponus.Equityvaluesoffinancial
institutions have evaporated rapidly; credit
availabilityishighlyconstrainedandexpensivewhen
itcanbeobtained.Theseprevailingeconomicconditionshave
had a profound effect on all markets, and sectors within
markets, resulting in reduced GDP, markedly higher
unemployment, and a corresponding reduction in energy
demand.
At Enterprise Management Solutions, the management
consulting division of Black & Veatch, we place great
importanceonunderstandingtheunderlyingeconomicdrivers
thatsetstrategicdirectionsforenergysectorclients.Changing
trends in industry fundamentals are ever present. Coal,
naturalgas,nuclearenergy,renewableenergyandalternative
fuelsremainkeytopicsfordiscussion.Environmentalconcerns
and the increasingly likely impact of carbon legislation on
energy costs and the speed of economic recovery require
ongoing monitoring and evaluation. Cost pressure associated
with labour and material shortages has subsided across the
boardasdemandhasbeenreduced,butforhowlong?
...itisequallyimportanttoexaminethe
underlyingissuesofconcernamong
energyindustryleaders
To better understand the economic views presented here, it
is equally important to examine the underlying issues of
concern among energy industry leaders. Every year, Black &
Veatch conducts a detailed survey of senior utility executives
to hear their thoughts and priorities relating to the top 10
issues driving strategic directions in the industry. In the most
recent (2008) annual survey conducted, 501 utility industry
participantsresponded–a30%increaseon2007,with78%of
respondents working in various aspects of the electric utility
industry.
Whataretheissuessettingexecutives’strategicdirectionsfor
2009andwhatdothenumberssuggest?
Outlook For An Unpredictable Economy
Theinformationthatfollowsislargelydrawnfromtheearly
releaseoftheUSEnergyInformationAdministration’sannual
Energy Outlook for 2009 (AEO2009) and Black & Veatch’s
Strategic Direction in the Electric Utility Industry surveyconducted
inmid-2008.Thismaterialisthenbenchmarkedagainstother
information garnered from day-to-day interactions with the
energymarket.Lastly,abitofpersonalopinionisadded.
worldPower2009 29
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