EnergyBiz recently interviewed Randy McAdams, partner at ScottMadden, prior to the 2015 Itron Utility Week Knowledge Conference in Los Angeles. In the article, “Utilities Struggle to Map Their Futures,” Mr. McAdams shares his observations as utilities begin to consider transforming their infrastructures. “The challenges presented to utilities given today’s new paradigms are significant, and we are seeing many if not most of our utility clients examining key aspects of their business models,” said Mr. McAdams.
The following transcript has been edited for length. To access the full article, please click here.
“The consiglieres serving the electric utility industry have been busier than ever these past few years for all of the well-known reasons: the unrelenting blows of competitors raining down on the business model,” said the article’s author, Allen Greenberg. “No solid consensus has emerged for what might be the best strategy for utilities straining to keep up.”
Mr. Greenberg continues, “Scheduled to speak Monday at the Itron Utility Week Knowledge Conference, McAdams noted that renewable costs have declined dramatically, the Clean Power Plan is now in place and that, thanks to technological advances, the boundaries between customers and producers are breaking down.”
“The lines are becoming blurred. Regulators are rethinking the rate of return paradigm. All of this is bringing into question business models, including the vertically integrated model,” McAdams said. “I would not say that anyone has fully adjusted. Almost all of the utilities are talking about doing things. But no consensus has emerged. And I'm not sure there is a single right response.”
McAdams adds, “Regardless, the pace of change is accelerating. And the threat is real and immediate for some and will only get only more prevalent, with implications for operations, pricing, regulatory affairs and even societal fairness.”
Mr. McAdams continues, “I think it's a little riskier than it has been” to invest in utilities. “But utilities still provide a service that is essential and always will be. They can do something that nobody can do, despite the disruptive forces. It's one of the most capital-intensive industries in the world.” Mr. McAdams goes on to explain that no one else is going to build a nuclear plant. “The utility business is not going anywhere. But the imperative is there to adapt to new technologies and the possibilities of new business models and new paradigms,” he said.
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