Recently in Utility strategy Category

Last week's 33rd anniversary of the Surface Mining Reclamation and Control Act, also known as SMCRA, marked an important milestone in the development of the Powder River Basin coal fields, as does November's upcoming 20th anniversary of the 1990 Clean Air Act Amendments, which mandated reductions in sulfur emissions.

More often overlooked in the development of the region, which now annually accounts for about 40% of US coal production, is the construction of the so-called Joint Line, a 100-mile stretch of railroad in northeastern Wyoming used by Union Pacific and BNSF Railway that serves the six largest coal mines in the country.

Here's one group that seems to know how to put some zest in a crushingly dull subject. Dominion has submitted to an award program a video some of its people made about utility worker safety.

Power company of the future? For Michael Morris, CEO of American Electric Power, "10 years from now we look very much like we look today." Coal still the dominant source of power, because customers in AEP territory want power that is "reliable and cost-effective. Period." The coal will be cleaner, though.

On a CEO panel at Platts Global Power Markets Conference in Las Vegas today, Morris said policymakers continue to make "fashionable undertakings" like the smart grid, he said, and AEP is "happy to do it if it's free." Basically, though, he said different states and regions will do what fits their cultures, resource bases and economies.

Whoa, said NRG Energy CEO David Crane.

There's potential for this to turn ugly.

Duke Energy CEO Jim Rogers tickled some fancies a couple of years ago when he called natural gas the crack cocaine of the power industry. It's a quick fix, but then you pay the piper: sudden supply shortages and price volatility, including spikes that can induce shrieks from customer groups all over the country.

Even this short time later, though, the common wisdom is that it's a different era for all of us with respect to natural gas. And no one is more ardent about it than Aubrey McClendon, who has just thrown down a gauntlet to Rogers.

Westar Energy has just put the power industry's situation in a nice nutshell. It wants to delay adding a new baseload plant for as long as possible, because of the "seismic shifts in the assumptions shaping our industry."

Many, if not most, industries are facing uncertainty and challenges. But in their new comprehensive plan, Topeka-based Westar decision-makers identify in workmanlike language the exceptional range of what the power sector is dealing with: "fundamental uncertainties affecting our business: volatility in fuel and construction costs; technological advances in how electricity is generated, delivered, metered and used: new imperatives for energy efficiency; and evolving environmental policies and standards."

No drama here, except for the "seismic" part. Just plain facts.

Warren Buffett's annual letter to shareholders draws a lot of attention to the philosphy and folksiness of the Berkshire Hathaway guru's view of business and life. It also this year was a refresher on the basics of utility regulation: what he sees as the social pact between MidAmerican Energy and its public. And how he sees that same deal applying to Berkshire's newest holding, BNSF, the railroad.

"Our regulated electric utilities, offering monopoly service in most cases, operate in a symbiotic manner with the customers in their service areas," Buffett's letter says.

Pacific Gas and Electric is the classic, longtime "clean" utility -- almost no pollutant emissions. It just this week pulled out of the US Chamber of Commerce because of the chamber's tough skepticism about the need to regulate carbon emissions. But clearly, CEO Peter Darbee doesn't see company cleanness as any guarantee of future viability of a power utility.

Speaking at the Bank of America/Merrill Lynch utility conference in New York Tuesday, Darbee said climate change and renewable energy mandates are not the big challenges for the power industry. Instead, our correspondent Ethan Howland reports, he said distributed energy and smart meters present the much bigger threat to a business's way of life.

Sell me light-hours, cooling hours and water-heating hours. But don't sell me kilowatt-hours. If I took Peter Fox-Penner's advice, that's what I would tell my electric company.

And if utilities took his advice, that's what they would do. Roger Sant, who founded AES, proposed the idea in 1980, Fox-Penner, of the Brattle Group, recalls in a paper, and Thomas Edison's business started out that way: as an energy services company. Only later did it switch to selling only the kilowatt-hours, and leaving the electric appliances to others.

In 1980, the time was not right. But Fox-Penner sees its moment coming.

PSEG Group's chief executive, Ralph Izzo, persists in his belief that an electric utility can be something different from what it's been before. Whether he succeeds in persuading New Jersey regulators and policymakers that his newest idea deserves backing, who knows? But it's pretty inviting at first blush.

Don't leave it to me, the homeowner, to get around to replacing my refrigerator and my air conditioner, my light bulbs and everything else with more efficient ones, Izzo proposes. Make it the utility's job, the utility's business.

Affordable solar roofs, windmills that fit in neighborhoods or large yards ... other distributed energy sources that may come down in price. These could make real inroads on utilities' traditional business if the technologies really take hold as some inventors and visionaries dream. Combined with truly interactive smart grid developments, these things would change the nature of utilities. Improbable right now, the idea is nevertheless intriguing, and one blogger makes an interesting suggestion for the business model if the time comes: Utilities could be like banks. But cool, in a geeky, IT-genius kind of way.