U.S. utility survey respondents believe energy prices will rise significantly, place emphasis on growing nexus of water

OVERLAND PARK, KAN. (13 June 2011) –

Black & Veatchtoday released the results of its fifth annual

Strategic Directions in theElectric Utility Industry

survey in which more than 700 U.S. utilityleaders took part. Among the top findings in this year’s results, participantsbelieve that energy and commodity prices will rise significantly in the nextfive years, and water has become the top environmental and business issue.

 “More than 70 percent ofsurvey participantsagreedor strongly agreed that energy and commodity prices would rise significantly inthe next five years, signifying tremendous capital investment needs across thenation’s electric utility system,” said Rodger Smith, President of Black &Veatch’s management consulting business.

“Additionally, there is a growing awareness of the nexus of water and energyissue within the industry,” said Smith. “For the first time, water supply hasbecome the top environmental concern among all survey participants and watermanagement was rated as the business issue that could have the greatest impacton the utility industry.”

Additional survey highlights include:

• Lack of national energy policy impedes investment in new technology. Whenasked in the survey what factors most motivate the industry to invest in newtechnology, the two highest rated responses where “Regulatory Requirements” and“Government Incentives,” respectively.
   
  
• Smart Grid programs are hamstrung by “lack of customer interest andknowledge.” Survey participants rate customer engagement as the greatestimpediment to implementing Smart Grid programs in their areas.
   
  
  
  
• Coal will remain an important part of the U.S. energy mix. More than 77percent of respondents – virtually the same percentage as last year’s surveyresults – believe when fiscal realities are considered, coal remains key in theU.S. energy portfolio.
   
  
  
  
• Nuclear fuel disposal and storage is one of the top environmental concernsamong survey participants after the earthquake and tsunami crippled theFukushima Dai-ichi nuclear power plant. This survey was conducted immediatelyfollowing the tragic events in Japan, likely influencing responses to thisquestion. Nuclear was not in the top 3 of this environmental category in the2009/2010 survey results.
   
  
  
  
• Natural gas leapfrogs nuclear and wind as the top “environmentallyfriendly” technology among all survey participants. However, utilityrespondents still prefer nuclear. This is first time natural gas has taken thetop spot in this category, indicating gas as an economical and environmentallyattractive bridge toward a lower carbon future – particularly since surveyparticipants believe shale gas will be available at a reasonable price for thenext 20 years. 
   
  
  
  
• Approximately 20 percent of survey respondents are planning energy storageprojects, indicating this technology is moving into more main stream segments.This also correlates with other survey responses where participants believeenergy storage will have an important role within their systems beyond the nextfive years.
   
  
  
  
• Survey participants are optimistic that electric vehicles will account forapproximately 8 percent of their annual energy load by 2025. Participantsestimate electric vehicles will account for 1 percent of their annual energyload by as early as next year. Nationwide, 1 percent of annual energy loadequates to approximately 5,300 megawatts of baseload (nuclear, coal, biomass,geothermal or hydro) capacity – the energy equivalent to power more than 5million homes.
   
  
  
  
• The United States is at risk of losing its global competitive position inutility technology. Specifically, respondents believe U.S. solar, nuclear andwind industries are at some risk of losing their competitive positions. Morethan 80 percent of respondents believe China is the greatest threat to theUnited States’ overall energy competitiveness.

“Black & Veatch’sStrategic Directions in the Electric UtilityIndustrysurvey has captured the changing attitudes and priorities of NorthAmerican utilities for half a decade,” said Smith. “With growing emphasis onenergy policy, technologies and regulations, it is important to obtain theinputs and opinions of industry leaders in order to shape those policies andcreate greater understanding of the challenges and opportunities eachpresents.”

Black & Veatch’s annual survey provides insights and analysis intotraditional utility-focused questions regarding operations and regulations. Thefull survey and analysis is available online atwww.bv.com/electricutilitytrends. 

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About Black & Veatch

Black & Veatch (www.bv.com) is a globalleader in the consulting, engineering, construction and operation of what theworld needs now and in the future in the crucial areas of energy, water andtelecommunications and in providing up-to-the-minute services in the fastchanging federal and environmental markets. Founded in 1915, theemployee-owned, $2.3 billion company operates out of over 110 offices worldwideand has completed projects in more than 100 countries.

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