Utility execs huddle with financial analysts to hash out the road ahead for electricity.
SAN FRANCISCO – Utilities are now being called for to enable a clean electric sector – a pivot while tens of billions of dollars of new energy infrastructure investments are on deck.
That is job one, according to a panel of energy utility chief executive officers meeting here at the Edison Electric Institute annual financial conference.
The conference is a forum for senior utility executives to huddle with financial analysts and experts from across the nation to discuss the changing business environment and financial prospects for America’s investor-owned utilities. It is put on each fall by EEI, which represents utilities that serve 220 million Americans, and employ 7 million.
Patricia Poppe, CMS Energy president and chief executive officer, said, “We need ongoing cost savings as we make critical infrastructure investments.” CMS is Michigan’s largest electric and gas utility, serving 6.7 million customers.
Utilities across the nation have been experiencing flat to declining revenues as the economy continues evolving away from manufacturing and towards service sector activities, and as energy conservation and efficiency continues to advance.
At the same time, utilities must fund unprecedented levels of capital expenditures on key infrastructure as they deal with increasingly destructive weather patterns, the threats of cyber and physical assaults on their assets and the development of a smarter grid serving a more distributed electric system.
This is all happening as a revolution ramps up in transport, as we move away from fossil fuels and toward electric powered locomotion.
Stock and bond analysts, investment advisors, rating agencies all listened closely as the CEOs gauged the challenges they face and their plans to overcome them.
“In five years, our business plan has lots of runway,” Poppe said, with a “specific strategy of clean and lean, serving people, planet and profit.”
“I don’t think there has been a more exciting time in our industry in our lifetime,” said Patricia Poppe, CMS Energy president and chief executive officer.
Similar business plans are evolving in the executive suites of utilities from southern California to New Jersey and New England.
Pedro Pizarro, Edison International president and chief executive officer, said his California utility is reinvested $4 billion a year in its grid – both to “keep the lights on” and to support the state’s aggressive efforts to combat climate change and greenhouse gas emissions.
The company, the nation’s largest purchaser of renewable power, serve 15 million customers.
“The biggest challenge?” he asked. “There is a lot going on in the state – that’s the challenge.”
James Judge, Eversource Energy president and chief executive officer, said his Northeast utility is aggressively pursuing clean energy programs. “We spend $500 million a year on energy efficiency in three states.” Eversource serves 3.7 million electric and gas customers in Massachusetts, New Hampshire and Connecticut.
Ralph Izzo, Public Service Enterprise Group president and chief executive officer, said his company has invested substantially in making its business smart upstream. “We need to make it smarter at the customer level.”
In addition, cleaner energy is a priority at PSEG, which serves 2.2 million electric and 1.8 million gas customers in New Jersey.
“We’re proposing $2.5 billion in the next five years in clean energy initiatives,” Pizzaro said.
With all the challenges and investments ahead – opportunities to redefine the electric sector and utility business are unprecedented.
“I don’t think there has been a more exciting time in our industry in our lifetime,” Poppe said. Customers demand clean energy.
“Our job is how to make it happen.”