Capgemini, in cooperation with Platts, has released the findings from the third annual joint utilities executive study. The Platts/Capgemini Utilities Executive study is designed to identify current industry concerns, gauge opinions about the future of the energy industry, and assess how utility companies will meet ever-increasing energy demands.

After surveying more than 100 executives within the electric and natural gas industries in the United States and Canada, this year’s study revealed that, amid a weakened economy and a new U.S. administration, respondents were divided in their level of confidence in the energy initiatives outlined in the Obama administration’s energy plan. Specifically, just over half of utility executives (54 percent) believe that new policies executed under President Obama will have a significant impact on the profitability and structure of the electric industry. However, many utility executives surveyed are concerned that these programs will be costly and will not receive the necessary funding from the government.

This division expressed among executives reflects concern on a national level for the near-term impact of President Obama’s energy initiatives; however, government concerns are only exacerbated by a number of industry challenges, ranging from regulatory uncertainty and the environment, to deploying critical infrastructure. The 2008 – 2009 study revealed that the five most critical issues facing the energy industry include:

• Addressing industry regulations
• Addressing environmental concerns such as emissions, carbon dioxide and greenhouse gases;
• Recovering costs, building new infrastructure and obtaining permits for transmission;
• Gaining access to capital, maintaining liquidity, and recovering costs; and
• Coping with aging workforce and workforce management issues.

Regulatory Uncertainty and Environmental Concerns
According to the study, both regulation (59 percent) and the environment (58 percent) are cited as the top challenges facing the industry today. Specifically, obtaining local level rate recovery (55 percent) and uncertainty surrounding carbon emission regulation (49 percent) were ranked as the two most salient issues by senior utility executives with respect to regulation.

Among key findings relating to the environment, 42 percent of executives believe that building generation-transmission capabilities to support renewable energy sources is the leading environmental concern, followed by increasing energy efficiency and customer conservation programs.

Infrastructure, Access to Capital and Aging Workforce

Other key issues that energy executives believe must be addressed include recovering costs for new construction, maintaining liquidity and knowledge-capture from the aging workforce.

Infrastructure needs are the third leading concern expressed amongst utility executives. Specifically, the majority (58 percent) of executives indicated that recovering costs for new construction is their chief concern regarding infrastructure, while 43 percent expressed concern over financing this construction.

This concern over financing has increased with the weakened economy, replacing “Technology Utilization” as one of the top five industry concerns since last year’s survey. Specifically, over half of the executives surveyed (55 percent) indicated that maintaining liquidity was extremely important, while 54 percent cited obtaining recovery costs as another critical issue.

The aging workforce and effectively managing knowledge transfer continues to be a top concern for utility executives. The industry faces a significant loss of seasoned employees as the current workforce nears and enters retirement (29 percent), and as a result, executives continue to underscore the importance for effective knowledge transfer (31 percent) and capture (25 percent).

Future Concerns & Projections for the Energy Industry

In looking toward the next 10 years, energy executives provided a snapshot of industry issues that include increased environmental regulation, an increase in consumer electricity rates, as well as an increased focused on energy efficiency and renewable generation.