The electric utility industry has set a course for transformation that answers and supports America's call for change, Edison Electric Institute President Tom Kuhn said in his annual "state of the industry" speech to Wall Street analysts.

Kuhn said the industry, by virtue of its central role in the economy, will be a key player in helping to address the most pressing issues facing the nation.

"Our issues are at the center of the debates over economic policy, energy strategy, national security and the environment," Kuhn said. "We are excited by the challenge and optimistic that we -- by continuing to work with all of the stakeholders and policymakers involved -- can help form the right framework to transform the way our industry works and the way the nation addresses its energy future."

Kuhn said the electric industry's success will rest upon aggressive action in four key areas: Energy efficiency, smart grid and advanced electricity transmission technology, plug-in hybrid electric vehicles and advanced, low- and carbon-free electric generating technologies.

"The 'electric transformation' that the industry is undergoing will create jobs, stimulate economic growth and build a greener, lower-carbon electricity industry," he said.

Among the first orders of business, Kuhn said, will be increased focus on energy efficiency, as reflected in the stimulus package being considered by Congress.

Efficiency programs also can be boosted, Kuhn said, through the adoption by state regulators of policies that encourage more investment and provide incentives to utilities to include efficiency in resource portfolios. "Electric companies have the expertise and the resources to help customers and businesses save energy and save money," he said.

Modernizing the nation's electric transmission and distribution grids by making them "smarter" will help customers manage their energy use and help electric companies manage peak demand, Kuhn said -- especially if a modernized grid is combined with innovative rates.

Promoting the introduction of plug-in hybrid electric vehicles also has the potential to save customers money at the gas pump while reducing emissions and decreasing dependence on foreign oil, said Kuhn, who noted that fuel costs for plug-in hybrids also are significantly less expensive than for internal combustion-powered cars or trucks. "A PHEV connected to the grid will enable consumers to charge up during the overnight hours when electricity is cheaper, and then wake up to a car ready for the morning and evening commute."

Technology also will play a part in addressing environmental issues facing the industry, Kuhn said. "We, in partnership with the government and others, need to develop, deploy and fund a full suite of climate-friendly technologies and measures, including energy efficiency, advanced nuclear plants, more efficient coal technologies coupled with carbon capture and storage, and renewable energy resources," he said.

With Congress likely to begin debating the climate issue later this year, Kuhn noted that the EEI Board of Directors has adopted a climate framework that calls for reducing carbon emissions from current levels by 80 percent by 2050. The framework -- designed to reduce emissions while mitigating the cost to electricity customers -- recommends allocating emissions allowances to the utility sector and other sectors in the early years of a cap-and-trade program, followed by a gradual transition to an auction-based approach.

Kuhn also noted that renewable generation sources will help to substantially reduce carbon emissions. The electric industry added almost nine gigawatts of renewable capacity to the generation fleet in 2008, a 54-percent increase over 2007 that brought the nation's total renewable capacity to about 4 percent of the overall generation portfolio.

Kuhn said he expected a long-term extension of the production tax credit for renewables to be included in the final stimulus bill.Extending this credit combined with establishing a price for carbon emissions is the best way to support renewable development at the federal level, he said.

Increased transmission capacity also is needed across the nation to enable integration of more renewable resources and to maintain reliability, Kuhn said, and EEI supports strengthening the Federal Energy Regulatory Commission's siting authority in order to spur more grid development.