ERMUSR MISC MEMO 05-13-2008 - Laserfiche WebLink

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~~~ '~ ~~t~~~ ~ In the next five years to 10 years, environmental regulation, the focus on conservation and energy efficiency, and inclusion of renewables in the resource mix will become increasingly important issues. °~ Retail competition in the electricity industry has been unsuccessful and is not expected to move forward in its current form. Capital expenditures, generation operations, cyber security, transmission operations and governmental regulatory affairs are areas where the surveyed executives most often said they plan to increase spending over the next two years. Environmental Issues Looming Larger As the worldwide focus on environmental protection continues to build, the North American energy industry is clearly taking notice. When asked to name the top three challenges facing the industry, the vast majority (77 percent) of the surveyed executives identified the environment -including such issues as global warming, climate change, and emissions/carbon requirements. More than ever before, energy executives are focused on the environment. In fact, when respondents were asked to compare the industry's focus on the environment in 2007 against that of 2006, 95 percent of the executives said it had increased. This is indicative of the increasingly pressing nature of the impact of environmental concerns on today and tomorrow's business. Onset of Regulation Requirements Participants of the study most strongly agreed that over the next five to 10 years, there will be increased environmental regulation as the focus on energy and conservation increases. Primary concerns cited by executives relate to the costs associated with building new plants and retrofitting existing plants to meet environmental regulations, as well as the costs associated with incorporating renewable resources into the fuel mix. These increased costs will likely impact monthly bills for end-users, adding to concerns executives face dealing with public opinion. Workforce Management: Addressing the Aging Workforce The most pressing workforce management issue is continuity as the workforce ages, raising the equally important elements of knowledge capture and transfer. One of the new elements to the workforce management topic is the increased competition for talent, both locally and globally As the need for new build increases, so does the industry demand to maintain a strong knowledgeable workforce in order to build, maintain and operate North American utilities. Infrastructure: On the Edge As with the environment, the focus on infrastructure has increased dramatically relative to 2006. Two-thirds (66 percent) of the respondents said the focus on industry infrastructure has increased in the past 12 months. Seventy-four percent of executives report that new or aging infrastructure is one of the top three issues facing the industry today. Concerns surround recovering costs for new generation construction, followed closely by similar concerns for recovering new transmission costs, are significant. Unfortunately executives doubt that solutions to cost recovery will be resolved in the near future. Technology: Smart Metering and AMI -Critical in Helping to Meet the Industry's Toughest Challenges Long viewed as being averse to change, the energy industry appears to be quickly breaking that mold. Perhaps nowhere is this more evident than in the use of technology. For these challenges, industry executives said they see technology in general -and smart meters, automated metering infrastructure (AMI) and clean-coal -I ~ ~ra~~#M~~