Senior executives in American utility companies are focusing their energy on improving customer service and increasing generation, transmission, and distribution capacity rather than on M&A or strategic restructuring moves. According to findings from the tenth annual PricewaterhouseCoopers LLP report, "A World of Difference: Utilities Global Survey 2008," which surveyed 115 power companies in 37 countries, respondents in the United States indicated improving capacity factors and providing better and more efficient customer service were the key areas of focus for enhancing shareholder value. To deliver this value, investments are being made in enhanced customer billing systems, and nearly every large-scale utility in the United States is exploring or implementing advanced metering infrastructure (AMI) and other smart meter/grid technologies.

Globally, power companies have significantly changed their outlook for the sector over the past 12 months. In the 2007 survey, only 33 percent of respondents predicted they would make a direct investment upstream; however, this total increased to 51 percent in the 2008 report. Additionally, they also expect increasing regulation and obligation to be a major force shaping the sector. Within 10 years, 48 percent of all respondents expect to have repositioned internationally and 42 percent within the value chain in response to regulatory moves, compared to 38 percent and 28 percent doing so now, respectively.

For the second year in a row, encouragement of renewable energy topped the list of key developments global respondents expect to see in their power markets in the coming years. The focus on cleaner power and the associated concerns of emission regulation and energy efficiency top the agenda for utility company survey respondents in every major power market (the Americas, Europe, and Asia Pacific). The emphasis on environmental issues became strongly evident last year and is even more consistent this year, with the trio of renewable energy, emissions regulation, and energy efficiency rated above other pressing concerns such as security of supply.

When asked to pinpoint their company's strategic growth opportunities, American executives identified construction of new generation as their biggest opportunity for the coming year with the investment in infrastructure (wires) coming in a close second. Rate cases continue to receive significant management attention as new construction increases the rate base and combines with an escalating cost of service. Accordingly, survey respondents indicated a major emphasis over the next year will be on securing appropriate new rates.

American respondents are more bullish than their counterparts elsewhere in the world about the potential impact of nuclear power, as opposed to renewable energy, in limiting the greenhouse gas (GHG) growth, with 56 percent highlighting nuclear versus 35 percent expecting renewables to make the biggest impact in the next 10 years. Concern about GHGs is having a significant impact on American utility investment decisions, as it is elsewhere in the world, and many U.S. power companies are altering project investment decisions accordingly. However, 47 percent of American utility executives felt that their company's environmental strategy and performance had no impact on investors, far higher than the 20 percent of respondents in Asia and the 24 percent in Europe who said likewise.

"Implementing new technologies to reduce greenhouse gas while at the same time upgrading ageing utility infrastructure will put significant upward pressure on Electric rates. Legislators representing consumers already confronted with higher gasoline and commodity prices and a weak economy will have to make some tough choices regarding priorities," stated Paul Keglevic, U.S. utilities industry leader for PricewaterhouseCoopers.

Looking ahead, U.S. utility company senior executives believe prospective federal legislation limiting carbon emissions will be the biggest change affecting the industry in the next five years, together with an overall increase in regulation. The question is no longer if legislation will be passed but how the legislation should be structured -- either as a carbon tax or as a cap and trade program.