VAIL, Colo., Sept. 18, 2000 The US and other industrialized nations are shifting from oil-based to electricity driven economies, UtiliCorp United Inc. Pres. Robert K. Green told 400 energy executives attending an industry strategy conference Monday.
In the US, for example, 80% of the growth in energy demand since 1990 has been met by electricity. In addition to the growing use of electricity, Green said, in the “new economy world” electricity must become more reliable than ever before.
“The factories of the ‘old economy’ would hardly blink an eye if there was a momentary outage,” Green noted. “But with today’s digitally run plants, even momentary outages require the wholesale resetting of computer-driven systems. And as business moves online on a 24/7 basis, cutting off the power will be like cutting off their lifelines.”
Winning in the new economy “where the internet is king” will require a dramatic shift from relying on investments in “land, labor and capital,” to building businesses outside the US and in domestic markets where state-by-state energy regulation is no longer a factor, Green argued.
“The problem in the US, and especially in California, is that regulators continue to apply the old command-and-control regimes based on cost of services and regulated rates of return that seek to match prices with costs,” Green said. Green blamed state-by-state regulation for holding back the development of a more competitive US energy economy, while other countries around the world are already reaping the benefits of deregulation.
In Germany, industrial electricity rates have dropped 60%, and in the UK gas rates under deregulation have fallen 20%, “which means that UK natural gas is cheaper than gas in the United States,” Green said
“This is remarkable when you consider that most of the UK gas comes from expensive North Sea wells,” he added.
Energy companies must also make greater use of the internet in the new economy to bolster efficiencies, which can increase corporate profitability.
“The old yardstick of Wall Street anticipated that utilities would grow 2-3%/ year; now the demand is for 8% or better,” he said.