As a follow up to the GMH post Low cost power?, here's another valuable interchange under the EnergyPulse article, What to do when customers like gas rationing and politicians better than their utilities?, by Mark Gabriel, where Greg Tinfow wrote on 12.6.12 that:
Here in California, we generally have to beat a 2/3rds threshold for votes on any tax increases. Despite that high hurdle, people do vote to tax themselves--to the tune of $7 billion/year just a few weeks ago--when they know what they are getting for their money. The utility industry needs to catch up to the needs of the future, not the 1930s regulatory policy that they've operated under for 80 years. Hurricanes, renewable energy, and global warming provide the industry with an unprecendented opportunity to remake themselves into what they should have been all along, energy service providers rather than monopoly power producers. As tempting as a "tough love" strategy may be to those who believe IOUs are the root of all our energy problems, the reality is that they behave exactly like any other profit-oriented business, despite regulatory restraints stronger than just about any business.
The future is going to require both a smarter energy infrastructure and a different kind of energy company than in the past. The transition is not going to happen overnight, and the cost of bringing the under-funded distribution infrastructure up to speed will not be cheap or easy. It is doable however, and the better utilities are at communicating both the costs and the benefits, the sooner we'll get moving forward.
That future of electric utilities is not at all doable. Jesse Berst SmartGridNews.com post Get ready! FERC spotlights 3 major challenges for utilities
is introduced with “The bad news – there are big, big challenges looming for the electric utility industry. The good news – agencies and regulators are increasingly aware of these painful truths and, therefore, increasingly willing to discuss solutions. That was the message from FERC Chairman Jon Wellinghoff during a briefing on Capitol Hill this week.” But that good news is not at all for the utilities.
This is why! Ever since the 1980s, utilities have had an "... unprecedented opportunity to remake themselves into what they should have been all along, energy service providers rather than monopoly power producers," as Mr. Tinfow said. Please take a look at the article Why the Current Smart Grid Process Doesn’t Let the New Steve Job Connect the Dots
in two key events where they lost that unprecedented opportunity: the Energy Policy Act of 1992 and once again in the development of the Integrated Energy and Communication Systems Architecture (IECSA) project, circa 2003.
The situation that utilities face today were clearly anticipated in 1982 in chapter 4 of John Naisbitt’s bestseller Megatrends: Ten New Directions Transforming Our Lives, on the "Law of the Situation: the railroads did not understand."
Suppose that somewhere along the way a railroad company, sensing the changes in its business environment, had engaged in the process of reconceptualing what business it was in. Suppose they had said, "Let’s get out of the railroad business and into the transportation business." They could have created systems that moved goods by rail, truck, airplane, or in combination, as appropriate. "Moves goods" is the customer-oriented point. Instead, they continued transfixed by the lore of railroading that have served the country so well - until the world change.
Of this phenomenon Walter B. Wriston, chairman of Citycorp, in 1981 said: "The philosophy of the divine right of kings died hundreds of years ago, but not, it seems, the divine right of inherited markets. Some people still believe there’s a divine dispensation that their markets are theirs - and no one else’s - now and forevermore. It is an old dream that dies hard, yet no businessman in a free society can control a market when the customers decide to go somewhere else. All the king’s horses and all the king’s man are helpless in the face of a better product. Our commercial history is filled with examples of companies that failed to change in a changing world, and became tombstones in the corporate graveyard."