BY HEATHER JOHNSTONE
With the mid-term elections looming in the United States, President Obama will be less that pleased to hear that, according to a new survey, the majority of utility executives are dissatisfied with his first-year performance on energy issues.
The American Power Act has been introduced but utilities remain unhappy with US energy policy
Last month saw the introduction of the long-awaited US Senate energy and climate bill, the robustly named ‘American Power Act’. Although welcomed, this legislation is seen by many as less ambitious than the American Clean Energy and Security Act (the Waxman-Markey climate bill), which was passed by the House of Representatives last year. In one particular area, the American Power Act places greater limits on carbon trading – a topic that proved contentious with a number of Senators.
In the early days of his presidency Barack Obama made it clear that creating a clean energy economy in the US was a priority, and initially things looked positive with the announcement of a ambitious energy plan that would see the swift introduction of a climate bill, putting a price on carbon, creating a strong national renewable energy target and promoting investment in low-carbon technologies.
With the Waxman-Markey climate bill passed by the House of Representatives in July last year, momentum appeared to be building. This piece of legislation created a cap and trade programme, a 20 per cent renewable energy target by 2020 and a programme to upgrade the grid and stronger energy efficiency standards.
However, this climate bill quickly stalled in the Senate, where lawmakers became side-tracked by other issues, primarily the highly contentious health care debate. So in many respects the introduction of the American Power Act is nothing short of a miracle, but how do the leaders in the US utility sector think President Obama has done on energy policy? According to a recently released survey from Platts and Capgemini, the resounding answer is “not very well.”
The study, which involved more than 100 senior utility executives from the North American electric and gas industry, found that eight out of ten or 80 per cent were not satisfied with President Obama’s performance in the area of energy policy over the last year. The study also revealed that executives believe that the utility industry’s greatest challenges are legislation uncertainty, the environment, incorporating new technology, finance and variable consumer demand.
According to the executives, uncertainty around emissions and carbon regulation is the leading issue within current regulation concerns – 75 per cent of respondents rated this issue as important/very important. Fifty-two per cent also had concerns over a lack of an adequate national energy policy, with 50 per cent expressing concern about the uncertainty over transmission regulation.
The focus on the environment continues to be a leading issue for utility executives. According to the survey, building new generation and transmission for renewables, together with increasing energy efficiency and conservation programmes are key issues – 42 per cent of respondents rated these issues as either important or very important.
On the finance side, as North America continues to climb, albeit slowly, out of the recent economic downturn, utility executives still expressed concern, particularly in relation to the issues of cost recovery, access to capital and maintaining liquidity, meaning significant financial challenges remain.
When asked about end-user issues the executives were most concerned with maintaining customer satisfaction. However, in light of the US’ drive towards a low-carbon economy, 48 per cent were concerned about educating the consumer about the true cost of ‘green’ energy, as well as managing the end-users’ expectations for continued low energy costs.
The executives also said that incorporating new technology into their business is key, with a particular focus on automated metering infrastructure (AMI) (47 per cent), smart grid technology (43 per cent) and smart meters (42 per cent). Interestingly, despite the uncertainty over transmission regulation, the majority of respondents said their organization either has a smart grid strategy in place or is currently developing a strategy. In addition, over a third of participating companies have full implementation of smart meters and AMI systems.
Although the Platts/Capgemini survey was conducted prior to the introduction of the American Power Act, it still provides a useful indication of the mood of the North American utility industry.
With the mid-term elections looming, and the expectation that the make-up of both the Senate and the House of Representatives will change dramtically, what this means for future energy legislation from the Obama presidency is anyone’s guess.