INNOVATION always has been an important part of our industry. Incorporating new technologies into our businesses has helped the industry meet the challenges we have faced in the past. Innovation helped us harness the elements—coal, natural gas, water, wind, even the atom—for generation. When environmental regulations were passed, innovation spurred new technologies to help us keep the air and water clean. Since 1990, electricity use has increased 37 percent, while annual emissions of both sulfur dioxide and nitrogen oxides have decreased about 70 percent. We achieved this largely through the deployment of more efficient power plants and emissions-control technologies.
Although the industry’s progress demands innovation, most of the issues that have an impact on our business remain the same—increasing costs driven by tightening emission standards and equipment replacement costs much higher than the depreciated equipment now on the books. Today, however, we face additional challenges and opportunities associated with an evolving customer role—requiring, in some cases, the integration of more and more distributed power sources into the grid. The growth in distributed generation is being driven by policy as much as by technological advancement, and we do not foresee a reversal of these trends.