The Primrose Path: What Next for the Electric Utility Industry?

Another thought piece I wrote several years ago as I was musing on my future which at that time was closely linked to the electric utility industry.

From my well meaning beginnings in the electric industry in the humble field of demand side management, I witnessed and became part of the deregulation movement, the rise of Enron, the turning of the industry from its slow quasi-governmental and collegial operations toward competitive and streamlined business. The industry began thinking and talking differently. To some, a customer was no longer a meter, a collection of customers no longer a rate base but a market segment, the utility next door no longer golfing buddies. Customer Information Systems were replaced, Y2K issues resolved, trading systems installed. Mergers have taken place, companies have gone bankrupt, merchant generation strategies have come and gone. Energy services subsidiaries have been started up and shutdown, telecom strategies have been initiated and terminated, diversification efforts have been diverse, from appliance servicing to nuclear plant maintenance. Everyone had a different approach or so they thought.

But where is the industry heading now? Uncertainty abounds. Deregulation in many places has slowed as a result of the California experience and the collapse of Enron. The objectives of deregulation, ostensibly to obtain lower prices for consumers and improve consumer decisions regarding energy usage by giving them access to market based pricing, have not yet been met. Will they ever, who knows? But we do know they will take a long time. Perhaps all the time and effort we spent pursuing deregulation would have been better spent promoting more noble objectives, such as investing in more alternative generation resources, or improving air pollution controls in power plants or increasing rather than decreasing DSM (demand side management) budgets. It appears those consumers aren’t too enthralled with the prospect of customer choice. Shame on me for saying this as one who has spent the last twelve years of her life promoting the concept of customer choice, but maybe consumers are sick of all the choices they have to make on a daily basis and don’t want another one, particularly one as silly as deciding who has the best electron.

Forgive me comrades, but really didn’t we learn in science class that all electrons are the same? Isn’t it bad enough that we have to deal with the cable company, the ISP, the local phone company, the long distance phone company, the intrastate phone company, the cell phone company, the power company, the gas company, the demands of our children for more, and our own needs? Who wants to marketed or telemarketed by another group of sad people trying to sell you something you don’t really care about in order that they can make (barely) a living.

In retrospect, was the pre-deregulation electric utility industry such a bad thing? Didn’t it tend to provide a venue to promote social and environmental good? Wasn’t it a friendly place to work? Weren’t many of the people who worked in them because they weren’t measured based on quarterly results inclined to seek the optimal result, not the lowest cost shortest term result? Is the spot where we now find ourselves vis a vis this industry in no small part the result of the ambition and manipulation of more than a few Harvard MBA types who sought the fallow ground of an industry for the most part untapped by raw capitalism? Doesn’t Jeff Skilling epitomize this? Were the aims of the deregulationists really noble? Can we really apply the lessons learned from one or two other industries that were deregulated to decide the impact of deregulation on our industry? It certainly wouldn’t seem that we would be basing our decisions on statistical samples.

Imagine if the industry and everyone associated with it hadn’t expended a substantial amount of its capital particularly its intellectual capital on deregulation. Perhaps we could have averted this current war of terrorism that we are in. A good deal of our foreign policy is driven by our need to protect and defend our sources of oil overseas. And a good deal of the anger towards the US stems from the steps we take to protect those interests at times perhaps at the expense of our sensitivity to other peoples and cultures. Don’t get me wrong, I am not saying I believe we deserve what we got because I don’t. But I am definitely of the belief that if we can find an equally feasible model of energy supply that is self-generating and self-sustaining, then why go mucking around in other people’s countries. We can do plenty of mucking around at home and muck things up just as badly.