→Changes in the Electric Utility Industry – On Monday, Mayor Roseberry and I attended the first day of the annual meeting of the Electric Cities of Georgia. Several parts of the program were very interesting. But the most shocking was the presentation made at 4:30 Monday afternoon by Mr. Steve Collier on: “The top 10 challenges in public power systems." Mr. Collier is an electrical engineer and has worked in the public power industry for almost 40 years. I'm not sure my notes capture everything he said; it was pretty shocking. We covered some his slides at the retreat Friday. Here are several of his comments that went with the slides:
• We need to accept that there has been a foundational change in the electric power industry. Some of the legacy foundations of the electric business have changed dramatically.
• Electric power generation benefited from the economies of scale between the 1870s and the 1970s. Since the 1970s, there are now diseconomies of scale; that is, big plants are more expensive and are too risky.
• The 1973 OPEC crisis completely changed the industry by changing the cost of oil.
• The price of electricity is now rising faster than the cost of living.
• It used to be that the demand for electricity increased by about 10% per year. This has pretty much stopped since 1973, there has been a decline in the increase in demand.
• Consumers are no longer indifferent to sustainability. Environmental concerns are becoming more and more important to consumers.
• Global developments have an impact on the US electric market. China is building two coal plants every 10 days. All of the USA has only 400 coal plants. China now uses much less kilowatt hours per person than we do. But they are catching up.
• There are disruptive new technologies in the market such as solar power. Solar cells are getting cheaper each year.
• The bulk power grid is inadequate. It is nearing the end of its useful life. Utilities are letting it wear out and only repairing it when it fails.
• We are not replacing power plants. We are retiring coal plants as they become uneconomic.
• Climate change or global warming, or whatever you want to call it, has resulted in a greater number of severe weather events. The combination of severe weather events and a poorly maintained distribution network results in a greater number of outages.
• In the future we were likely to see distributed generation with small privately owned points of generation. They will have to integrate into our power distribution network. It wasn't built for that.
• It is possible that our customers are going to get electricity from someone other than us. Customers are putting a greater value on carbon footprint, renewable energy and the problems of radioactive waste. People want to get off the grid.
• Security both cyber security and physical security of the distribution network are going to become more important.
• The rates we now charge are based on electric usage, as measured by kilowatt hours. As the costs go up the total kilowatt hour demand is going to go down and we may have to come up with a different method of billing.
• Technology changes will continue to accelerate. Smart meters from 10 years ago are no longer very smart.