Utility industry execs see higher electricity prices, greater environmental regulation; divided on Obama's energy plan
New York - April 28, 2009
Third annual Platts/Capgemini utilities executive study results just released
Executives of North American utility companies are nearly split on whether U.S. President Obama's proposed energy initiatives will have a significant impact on the structure of the electricity sector, according to the third annual Platts/Capgemini Utilities Executive Study just released. But there is greater executive agreement that environmental regulation and electricity prices for end-users will be increasing.
Fifty-four percent of the utility company executives responding to the quantitative survey said they believe the impact on industry profitability from the new administration's plans would be significant. However, respondents share concerns about the costliness of the programs, especially without increased funding at the federal level. The study involved more than 100 executives and included both quantitative and qualitative elements.
The greatest industry agreement came in the nuclear arena. Some 88% of the utility company executives said they either "very" or "somewhat" strongly support the administration's nuclear energy plans for safe and secure nuclear energy sources.
Other Obama energy policy initiatives embraced by the power companies include: setting national building efficiency standards (79%); promoting responsible domestic production of natural gas (77%); investing in smart grid (74%); developing clean coal technology (70%); and reducing federal energy consumption (69%).
However, the Platts/Capgemini Utilities Executive Study found there were many elements of the administration's proposal that the nation's commercial power leaders are not as fond of. Executives were the least supportive of the government's proposed requirement that renewable fuels generate 10% of the country's electricity by 2012 (39%). Prioritizing the construction of the Alaska natural gas pipeline carried 45% of the power industry's top-end support. Support for making the Untied States a leader in climate change held 46% of the executives' favor and 48% said they could "very" or "somewhat" strongly support the administration's proposal to invest in a clean energy economy with the creation of new green jobs.
When asked to predict the future direction of the energy industry on a10-point scale (10 being "strongly agree"), 58% of the utility executives scored the likelihood of increased environmental regulation at a 9 or 10. The prediction that electricity prices for end-users will increase was also rated similarly by 53% of the respondents.
In terms of finance, a small number of utility industry executives see a growing trend towards asset M&A instead of mergers and acquisition of complete business units. However, quantitative results showed that in the current economic environment there is less executive focus on mergers and acquisitions, and greater focus on cost recovery, gaining access to capital and maintaining liquidity. Qualitative responses also showed there was general consensus that a greater portion of corporate resources, both money and manpower, will be funneled to the shift to international accounting standards.
The Platts/Capgemini Utilities Executive Study is designed to identify current concerns, gauge opinions about the future of the energy industry, and assess how utility companies will meet ever-increasing energy demands. More than 100 executives within the electric and natural gas industries in the United States and Canada were surveyed. For full details of the 2008-2009 Platts/Capgemini Utilities Executive Study, as well as the executive summary, visit http://www.us.capgemini.com/plattsstudy.
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