The Foothills of
Economic Recovery Strategic Directions in the US Electric Utility Industry – 2010
By Stephen A. Stolze F
ollowing the deep recession of 2009 the US Economy has levelled off and entered what could be an extended period of slow growth. The strength of financial institutions
is recovering from unimaginably weak levels; and credit is increasingly available at moderate rates for high quality, reasonably leveraged opportunities. Counterbalancing these positive indicators are the yet to be known economic impacts of sovereign risks in the European Union, continued high unemployment and the inevitability of substantial tax increases lingering on the near-term horizon. From an energy point of view, the events of late 2008 and 2009 resulted in considerable US and European energy demand destruction that will take several years to recover. The political winds have changed considerably as have
the economic drivers that set strategic directions for energy sector stakeholders. New trends in industry fundamentals are emerging. Environmental concerns remain high; however, credible challenges to the accuracy of the data supporting global warming predictions have weakened the case for substantive climate legislation or regulation in the near-term.
Cost pressure associated with labour and material shortages have subsided across the board as demand has been reduced, and will remain at depressed levels until demand fully recovers. Low natural gas prices, the necessary future of coal, the high price to build new nuclear generation, and the interruptible nature of utility scale renewable energy alternatives remain key topics for discussion. To better understand the impacts of these economic trends
in the US energy utility industry, Black & Veatch Management Consulting (B&V) conducts an annual survey of senior utility executives to hear about their thoughts and priorities relating to the top issues driving strategic decisions. In the survey’s 2010 edition 329 utility industry participants responded. All respondents worked in various aspects of the electric utility industry – 96% completed all questions and nearly 50% were from investor-owned utilities with approximately 25% representing the public power sector. What are the issues setting executives’ strategic directions for
2010, and what do the numbers suggest? All of the above issues will be touched on in the course of answering key questions:
... the events of late 2008 and 2009 resulted in considerable US and European energy demand destruction
worldPower 2010
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