UTILITIES’ PROBLEM WITH NEW ENERGY

This S&P report explains California utilities (and others) might be more amenable to the development of clean coal technologies, which maintain consumers’ absolute and total dependence on the grid, than solar and wind.

Energy Efficiency May Hurt Utility Firms
May 11, 2007 (UPI)

WHO
Staandad & Poor, the famous credit-raters

WHAT
Profit margins are and will be hit by consumers’ efforts to conserve energy, be more efficient and create energy off-grid.

WHEN
The S&P report was released May 10. It is a description of current developments as well as an anticipation of coming trends.

WHERE
Based on the S&P observations, it is fair to say their observations only pertain to utility businesses on planet Earth.

WHY
There are three relevant points:
1. Efficiency and conservation reduce total sales by utilities and probably make consumers especially aware of ways to conserve and be more efficient at periods of peak consumption when rates and returns are relatively higher and utilities’ likelihood of overbuying is greatest.
2. As renewable sources become more widely dispersed, many off-grid options (solar systems, solar heating systems, solar water-heating systems, home and business wind turbine systems, etc.) become available to consumers, inevitably reducing total volume of utilities’ sales.
3. Managing the first two changes necessitates utilities’ investments in new personal, systems and technologies.
National rates vary
QUOTES
David Bodek, S&P credit analyst: "From a credit perspective, any directive with the goal of reducing retail customers' electricity consumption could create additional costs for a utility, especially if additional staffing or capital investments are necessary for efficiency and conservation…"