Utility execs see shift to more natural gas, worry about alternative energy ... - Kansas City Star

Changing regulations and technologies are big concerns for electric utilities, according to an annual survey of utility executives released Tuesday. But utilities also are embracing the challenges of alternative energy sources, electricity generated by their customers’ home systems and a changing fuel mix that includes more natural gas.

Those were among the findings in the ninth annual “Strategic Directions: U.S. Electric Industry Report” by Black & Veatch, the global engineering and design firm based in Overland Park.

The release of the report, based on responses from mid-May to early June from 435 respondents, comes on the heels of President Barack Obama’s announcement Monday of the final version of his Clean Power Plan, which is designed to reduce carbon emissions from U.S. power plants.

Some key points of the Black & Veatch report:

▪ Although respondents hadn’t seen the final rules, they agreed that natural gas “will take market share away” from coal and nuclear plants “to meet emissions goals under the Clean Power Plan.” But the responses were mixed on whether natural-gas production would increase enough to meet demand without price increases.

▪ Nearly two-thirds of utilities said they would increase their investment in renewable generation, such as solar and wind, in the next five years. Only 2.4 percent said they would decrease it. The rest would keep it the same or weren’t sure.

▪ Almost 80 percent of respondents said distributed generation â€" such as home solar power â€" was a serious business challenge. But nearly 75 percent said they were investing in, or were likely to invest in, technologies to accommodate or encourage such generation.

The area also is complicated because such generation, outside a utility’s control, could alleviate the need to build a new generating plant, or it could leave costly generating capacity idle.

▪ Just more than 51 percent of those responding said “balanced regulatory treatment between utility and consumer” was a top need for their utilities in the next five years. Regulatory issues that were much the same for decades now are complicated by the shift to alternatives, in part because solar and wind don’t generate constant power. That means more transmission lines, storage capacity and backup power can be needed, and how to compensate utilities â€" and charge customers â€" for those costs is an issue.

Nearly 60 percent also said they were reviewing their “net metering” policies, which include compensating customers who in effect sell power to the utility when their solar units generate more electricity than the customer needs.

▪ Thirty percent were planning investments in so-called behind-the-meter technology such as microgrids and energy storage and distributed generation. More than 40 percent were weighing the value of such investments.

▪ Utilities say they want customers’ help and plan to do more to reach out to them. More than half planned to invest more in social media in the next five years.

▪ Utilities’ responses on threats from hackers were mixed. More than half said they were ready to meet new cybersecurity requirements that take effect next year. But more than a quarter said they didn’t know how they would meet those requirements.

Dean Oskvig, the president of Black & Veatch’s energy business, summed up the situation for many U.S. utilities: “Today’s policies are based on a fixed-grid operator selling power to its customers. Times are changing. Customers can now generate their own power and put it back on the grid. At the same time, host utilities must maintain their complex infrastructure to meet government mandates for reliability. Utilities must continue engaging stakeholders and regulators in ways that harness technology gains and support environmental goals. They must do so while maintaining the reliable grid that consumers rely on.”