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Black & Veatch Releases Findings of 2006 U.S. Electric Utility Industry Survey

Posted on: Tuesday, 7 November 2006, 00:01 CST

Black & Veatch, through its management consulting and energy businesses, today announced the findings from its First Annual Strategic Directions in the Utility Industry Survey during the Edison Electric Institute's 41st Annual Financial Conference. Electric service reliability was ranked overall as the top concern facing industry respondents.

"The utilities' focus on providing outstanding service to their customers makes the concerns about reliability quite understandable," said Richard Rudden, Senior Vice President of Black & Veatch. "The industry will need additional and updated power generation facilities and upgrades to the transmission grid to ensure future service reliability. These are concerns that many in the industry have been voicing for years, and were affirmed by the North American Electric Reliability Council's 2006 reliability assessment released last month."

The survey represents input from 240 U.S. power industry professionals, and provides specific insights into how executives and managers rank and assign relative importance to the most pressing issues currently facing their operations. The survey was administered by an independent third party, the Sierra Energy Group, the market intelligence and research arm of Energy Central.

Survey respondents were broadly representative of the electric power industry in the United States, with 51 percent from investor-owned utilities (IOUs), which distribute about 75 percent of all electric power in the country; 19 percent from municipal utilities; and 30 percent from electric co-operatives (Co-ops), independent power producers (IPPs), regional transmission organizations (RTOs), and power-related consultants, and vendors.

The survey, completed in late-August, identified that IOUs and municipal utilities rank the reliability of electric service and the aging workforce as two of their top three primary concerns.

IOUs view service reliability as the No. 1 issue; electric infrastructure as No. 2, and the aging workforce as No. 3.

Municipals view aging workforce as their No. 1 concern, reliability as No. 2, and aging infrastructure as No. 5.

The survey also revealed that 47 percent of the IOU respondents regard their power generation operations as being "Near the End,""At the End,""Past" or "Well Past" their planned service lives. Some 44 percent identified their transmission operations as being in the same condition, while 51 percent of respondents also stated their electric distribution operations were in this range.

Other challenges analyzed in the survey include: environmental issues, fuel policy concerns, long-term investment, market structure, regulation, security risks, business continuity concerns and the implementation of new technology. In addition to providing their ranking of the key challenges, respondents also assessed the time and the expected costs for achieving goals to meet individual items listed in the survey.

"For the industry to fund its reliability needs, a period of sustained utility rate increases may be required between now and 2015," Rudden observed. "These increases could be 1 percent to 3 percent annually in the United States, with some regions being more or less than this average.

"After 2015, these rate increases could be somewhat larger, as new expensive baseload coal and nuclear plants come online to meet installed capacity and reliability requirements."

The complete survey results for the 2006 Strategic Directions in the Electric Utility Industry are available free of charge by contacting Black & Veatch at laytonge@bv.com or by visiting the company's management consulting web site at www.bv.com/consult.

About Black & Veatch

Black & Veatch Corporation is a leading global engineering, consulting and construction company specializing in infrastructure development in energy, water, information and government market sectors. Founded in 1915, Black & Veatch develops tailored infrastructure solutions that meet clients' needs and provide sustainable benefits. Solutions include conceptual and preliminary engineering services, engineering design, procurement, construction, financial management, asset management, information technology, environmental, security design and consulting, and management consulting services. The employee-owned company has more than 90 offices worldwide. Black & Veatch is ranked on the Forbes "500 Largest Private Companies in the United States" listing. The company's Web site address is www.bv.com.

Source: Business Wire

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