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State of the Electric Utility

State of the Electric Utility

Full Title: State of the Electric Utility
Author(s): Amy Gahran
Publisher(s): Utility Dive and PA Consulting
Publication Date: February 1, 2018
Full Text: Download Resource
Description (excerpt):

There’s a reason we call electricity “power” — it’s been the foundation of modern life for more than a century.

Since the establishment of the modern power industry in the early 1900s, utilities have been tasked with the
dual mandate of delivering reliable and affordable power to customers. Throughout the 20th century,
vertically-integrated power companies electrified virtually the entire nation through regulated investments
in grid infrastructure financed by their ratepayers. In 2016, U.S. utilities supplied nearly 4 million GWh of
energy, more than double what they did in 1986. Because their systems support the economy, utilities
are notoriously cautious institutions and are slow to change. In recent years, however, scientific realities, customer sentiment and regulatory initiatives have compelled the sector to add a third element to their mandate: sustainability.

Pushed by climate change and other environmental impacts of power production, regulators in the U.S., Canada and elsewhere have encouraged the development of low-emission power sources, like wind and solar, and the phasing out of the most polluting resources like coal. In the past two years, wind and solar power combined to surpass the annual contribution of hydropower to the overall utility power mix, and in 2016 natural gas-fired generation surpassed power produced by burning coal.

Along with the trend of sustainability, utilities have also had to cope with increasing competition for
electricity generation and retailing. While power utilities operated as natural monopolies in their service
areas for most of the 20th century, federal policymakers in the 1970s began to open up generation services to competition in hopes of securing lower prices for consumers. In the 1990s, a number of states began deregulating their power sectors, splitting competitive generation away from transmission and distribution utilities, creating the nation’s first wholesale power markets.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

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