Simplifying Complex Industry Relationships and
Accountability to Customers
are Key Attributes for Long-Term Success
Oxford, UK (10 July, 2008) -- Leonard Hyman, a senior advisor to Black &
Veatch’s management consulting division, Enterprise Management Solutions,
called for the electricity industry to rethink its approach to regulation in a
speech before the United Kingdom Energy Research Centre policy-making
conference held at St. Anne’s College, Oxford.
In his review of deregulated markets, Hyman noted that the deregulation of
the financial, telecommunications, transportation and natural gas industries
produced dramatic reductions in operating costs and brought new firms into the
markets. Consumers benefited from lower prices and new products and services.
He then contrasted the restructured utility power markets where prices to
consumers, relative to unrestructured markets, remained high.
The author of numerous books and papers on the U.S. electric utility
industry, Hyman quoted a 2007 study by Pfeifenberger, Basheda and Schmacher
that identified that restructuring had not changed the relative position of
consumers.
“The metrics by which we measure restructuring need to include the ultimate
level of service and reliability,” said Hyman. “If the goal of the exercise is
to encourage reinvestment, to strengthen the infrastructure, and to efficiently
deliver greater amounts of reliable, affordable electricity, then the
measurement criteria need to be expanded to encompass the quality of service to
the consumer.”
One issue identified by Hyman was the segmented nature of the U.S. power
market where the electricity delivered to any individual user may have been
generated by one company, transported by a regional transmission organisation
and delivered locally by another.
“Accountability is one of the keys to enhanced service delivery,” said
Hyman. “In the current market configuration, no one has full responsibility for
the delivered product.”
The presentation acknowledged that the absence of new technologies has
impacted cost reductions, and that customers have the power to help advance
restructuring efforts by embracing new product offerings more quickly.
Hyman concluded that the now complicated business proposition offered to
raise capital has increased risk for investors, and often has mired investments
in a swamp of arcane disputes. The electricity industry needs simpler, low-risk
business propositions to replace old facilities, modernise internal
communications, and deal with restrictions on burning carbon. The capital
markets need the kind of simple, low risk investments that utilities used to
offer. Perhaps through a simplified regulatory paradigm and greater
accountability for the ultimate impact of the regulations, the needs of
investors, utilities and consumers could all be served.
About Black & Veatch
Black & Veatch is a leading global engineering, consulting and construction
company specializing in infrastructure development in energy, water,
telecommunications, management consulting, federal and environmental markets.
Founded in 1915, Black & Veatch develops tailored infrastructure solutions
that meet clients’ needs and provide sustainable benefits. Solutions are
provided from the broad line of service expertise available within Black &
Veatch, including conceptual and preliminary engineering services, engineering
design, procurement, construction, financial management, asset management,
program management, construction management, environmental, security design and
consulting, management consulting and infrastructure planning. With $3.2
billion in revenue, the employee-owned company has more than 100 offices
worldwide and has completed projects in more than 100 countries on six
continents.
Enterprise Management Solutions (EMS) is the management consulting division
of Black & Veatch. EMS provides tailored strategic, process and technology
solutions to deliver improved operations, cost savings, new revenue streams and
greater customer loyalty. The company’s Web site address is www.bv.com.
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