Electric execs get charge out of tech possibilities
op executives from investor-owned electric utilities across the U.S. gathered in Hollywood, Fla., last week for the annual financial conference held by their trade association, the Edison Electric Institute.
They spent hours meeting with analysts, investment bankers and ratings agencies regarding their utilities’ financial returns and the outlook for capital spending, revenue and earnings. That’s the sort of talk that’s characterized the EEI meeting since it began 50 years ago.
But one topic is gaining attention in these industry circles: The potential for new technology to cause upheaval for utilities along the lines of what happened in the telephone industry, starting with the breakup of Ma Bell, and in the taxi business, with the more recent arrival of upstarts like Uber.
“We’re in a time of change right now on many fronts. It’s more change than I’ve seen in my career,” Christopher Crane, the CEO of Exelon Corp., and a veteran of more than 30 years in the electric-power industry, told the assembly during a lunch program.
“You look at customer desires now. They want to manage their own energy consumption. They want distributed generation. They want the new technologies that allow them some control in their own homes,” Crane said.
That challenge, along with increasing concerns over the potential for a devastating cyberattack on the grid and the increasing frequency of violent storms, not to mention stagnant demand for electricity in the U.S., make running utilities large and small that much more difficult now.
For Crane, the right course of action for a utility executive is to “adjust your business model to make sure you stay relevant.” Those who see new technologies as “destructive” will fall behind, he added.
Crane is far from alone among his peers in acknowledging the need to keep up with the sweeping changes in store for the industry. In fact, most see the writing on the wall, especially in states like California and New York, where policymakers are pushing for even faster reforms in the way electricity is supplied and used.
That said, one of the most bullish voices for change is Tom Fanning, CEO of Southern Company, which operates in Alabama, Florida, Georgia and Mississippi, states where utility regulation remains conservative compared to other parts of the country.
“It’s a fascinating environment,” said Fanning, whose company, like Exelon, is one of the biggest providers of electricity in the U.S. “I think there will always be a consistent set of large infrastructure, like nuclear plants, big gas generating plants and big consolidated renewable farms. But on the other side, there will be this evolution to a more distributed infrastructure.”