Utility Industry Faces Greatest Challenges in 30 Years, EUCG Workshop Reveals

Sep 28, 2006, 01:00 ET from EUCG

    DALLAS, Sept. 28 /PRNewswire/ -- The electric utility industry is
 confronting a host of strategic and operational issues similar to ones
 faced during the 1970s, according to industry leaders attending EUCG's
 annual fall workshop. Approximately 150 industry professionals representing
 more than 40 electric utilities gathered in Dallas for a three-day session
 to examine industry issues, discuss potential paths forward and share newly
 collected benchmarking data and best-practices concepts among the
 organization's membership.
     "When you list the challenges facing electric utilities today, folks
 who lived through the 1970s see many parallels to today's marketplace,"
 said EUCG President and Tennessee Valley Authority General Manager Stephen
 Saunders. "Our industry has aging infrastructure and work force, so we have
 a need for new power plants and new employees to run them. We need to
 strengthen our nation's transmission and distribution networks. We need to
 refurbish older power plants with new environmental technologies, just to
 name a few of our challenges. As a consequence, the electric utility
 industry is about to undergo a huge construction build-out and asset
 revitalization that may rival what we did back in the seventies," Saunders
     Inflation pressures are beginning to impact the cost of these projects,
 said Mark Derry, EUCG vice president and an Exelon (NYSE:   EXC) employee.
 "The volatility of the price of crude oil is impacting the costs of
 commodities and associated equipment integral to utility success. Add to
 that the demand for these commodities in emerging markets, and you have a
 1970s-like formula for price uncertainty."
     The future role of nuclear power generation within the United State and
 the world was also on the minds of workshop participants. "The 1970s were
 the last time nuclear power was part of a utility's new capacity strategy,"
 said David Ward, EUCG Nuclear Committee chairperson, of Duke Power (NYSE:  
 DUK). "Nuclear power is once again gaining popularity as a viable power
 generation alternative, and our membership believes there is a high
 likelihood we'll see a newly commissioned nuclear power plant before 2020.
 But many cost, technical and regulatory challenges do remain, and we'll
 need to manage these issues to be successful."
     EUCG members discussed dozens of benchmarking, best practices and
 change management presentations during the workshop, reported George W.
 Sharp, EUCG national marketing director, of American Electric Power (NYSE:  
 AEP). "This fall's workshop agenda was one of the most robust in recent
 memory, and the topics reflect current industry trends and issues," he
 said. According to Sharp, the EUCG committees focused on issues and ideas
 relevant to their respective business functions:
     * Transmission & Distribution (T&D) Committee:  Highlights included a
       continuing focus on managing the transition of the industry's aging work
       force into retirement.  "Almost 50 percent of the electric utility work
       force will be retiring over the next decade.  This depletion of a highly
       trained work force has the potential to impact a utility's ability to
       function effectively if not managed properly," said Joe Martucci, T&D
       Committee chairperson, of Public Service Enterprise Group (NYSE:   PEG).
       Other T&D workshop topics included alternatives to Six Sigma approaches
       to quality and an analysis of best practices in the new service
       installation process.
     * Information Technology (IT) Committee:  Primary workshop activities
       included the impact deregulation has had on the role of information
       technology within a utility.  Other topics included IT benchmarking
       experiences and issues.  The IT committee, EUCG's newest committee, also
       selected officers and established plans for collecting IT benchmark
       data.  "The EUCG IT Committee has successfully transitioned from an idea
       to a fully functioning entity within EUCG.  We welcome other utilities
       to join our core group," said Jack Flack, IT Committee chairperson.
     * Nuclear Committee:  Highlights included a state-of-the-industry update
       by the Nuclear Energy Institute, a review of contractor cost collection
       and auto-billing programs by member utilities and a work-management
       benchmark study.  The committee also spent time reviewing outsourcing
       trends and capital spending.  "Our committee databases on costs and
       staffing are the industry's best, and our members get a lot of value in
       their use as a benchmarking tool," said Ward, committee chairperson.
     * Fossil Committee:  Key issues discussed during the conference included a
       review of the cost escalation impact within North American scrubber
       programs, the causes of and cures for boiler tube failures, the use of
       Lean Sigma approaches to outage planning and panel discussion on spare-
       part program philosophies.  In addition, the Fossil Committee heard
       presentations about the operational experiences of a South Korean power
       plant.  "The Fossil Committee continues to focus on construction, outage
       planning and operational processes that drive value for member
       utilities," said James Patrick, Fossil Committee chairperson, of Ameren
       (NYSE:   AEE).
     * Hydroelectric Committee:  Highlights included an overview of the new
       Web-based hydroelectric database, presentations around plant maintenance
       performance drivers, a review of utility condition assessment programs
       and the use of interactive electronic training manuals.  "The Hydro
       Committee focused its attention on asset management issues because of
       the aging condition of the majority of hydro facilities," said Joe
       Hoagland, Hydro Committee chairperson.
     EUCG will hold its 2007 spring workshop in Savannah, GA. All energy
 professionals are invited. Interested parties should visit the EUCG website
 (http://www.eucg.org) for more information.
     About EUCG: EUCG is a global association of energy and electric utility
 professionals who discuss current and emerging industry issues, share best
 practices and exchange data for benchmarking purposes. The association is
 organized into five separate committees that represent specific utility
 functions: Transmission & Distribution (T&D), Fossil Plants, Hydro Plants,
 Nuclear Plants, and Information Technology (IT) departments. Members attend
 semi-annual workshops that focus on strategic planning, maintenance
 practices, operations management, outage management and various other
 aspects of the electric utility business. Membership is open to all utility
 companies and professionals worldwide. Interested parties should contact
 Pat Kovalesky, EUCG executive director, at 1-623-572-4140. Email:
 eucgexec@cox.net . Website: http://www.eucg.org .