York, NY (February 12, 2014) — Edison Electric Institute (EEI) President
Tom Kuhn and three other EEI officers today briefed Wall Street analysts,
bankers and investors on the U.S. electric power sector’s top priorities,
noting the ever-growing role that electricity plays in customers’ lives and
highlighting key issues on the industry’s radar for the coming year.
is the main ingredient of our modern lifestyle—and is the power behind the
‘smart’ in our smart phones, smart appliances, and smart homes and businesses,”
said Kuhn. “As the industry continues to utilize new technologies to transform
how we generate and deliver electricity, customers also are changing how they
use our product.”
discussed the steps the industry is taking to ensure the reliability of the electric
grid, focusing both on storm response and restoration efforts, as well as cyber
and physical security efforts. “Our approach to mitigating reliability threats
focuses on risk management, not risk elimination. While there is no single
solution that can make the grid completely safe and secure, we are partnering
with other critical infrastructure sectors, as well as with the White House,
federal agencies, and law enforcement authorities to share information,
identify vulnerabilities, and assess, respond to, and recover from attacks when
they do occur,” he said.
Vice President Brian Wolff outlined the key policy issues the industry will
face this year, both in Washington and in the states. At the state level, Wolff
said that one of the most critical policy debates is “the expanding role that
distributed generation (DG)—and the net metering policies that support it—is
having on the electric grid.” Wolff emphasized that EEI’s member companies are
leaders in expanding solar options for customers and stressed the important
role that DG, especially rooftop solar, will have in our generation future.
stressed that most rooftop solar customers rely on the grid around the clock.
Yet, because of the way that state net metering programs are structured,
rooftop solar customers pay less for the costs of the grid than they did before
they installed their DG systems, despite their continued reliance on the grid
and its services.
critical—and fair—that all electricity consumers who use the electric power
grid share equitably in the costs of maintaining it and keeping it operating
reliably at all times. The cost shifting caused by current net metering
policies must be eliminated,” Wolff said.
that another area that provides great potential for the industry is
transportation electrification. While sales of plug-in electric vehicles
continue to steadily grow, Wolff pointed out that there is a wide range of
commercial transportation applications, including fleets and seaports.
“Electrification provides our society with an opportunity to make a major part
of our economy cleaner, more efficient, and more energy secure,” he said.
and Financial Outlook
President of Energy Supply and Finance Richard McMahon recapped the industry’s
2013 financial highlights, noting that while the EEI Index posted a lower
average return than the Dow Jones Industrial Average and the S&P 500 last
year, “over the longer term, electric utilities’ total returns have continued
to reward investors more handsomely than the broader market.”
emphasized that the industry “is leading the transformation to make the grid
more flexible and more resilient to meet the growing demands of our digital
society. But transforming the grid requires significant investment. In 2013,
the industry was projected to spend $95.2 billion in total capital
expenditures, which would set another record.”
continues to advocate that the Federal Energy Regulatory Commission “provide
compensatory returns on equity that reflect the risks of development and the
long asset lives of transmission facilities,” McMahon said.
energy supply area, McMahon emphasized that “as energy markets change, and with
them, our industry’s generation fleet, preserving fuel diversity and
flexibility remains at the forefront of the industry’s priorities.”
environmental issues, EEI Vice President of Environment Quin Shea outlined the
industry’s regulatory challenges for 2014 and beyond. Shea emphasized that the
“electric power sector has made impressive reductions in its air emissions over
the past 20 years, during a time when electricity use grew by almost 40
reaffirmed that the industry continues “to support achieving the nation’s
environmental goals in a manner that minimizes costs to customers and is
consistent with the industry’s investment in, and transition to, an
increasingly cleaner, safer, and more reliable generation fleet and enhanced
pending Environmental Protection Agency (EPA) regulations that Shea discussed
was the cooling water intake structures rulemaking—known as the section 316(b)
rule under the Clean Water Act. “This is one of the most significant
rulemakings facing the industry this year,” he said. The rule would apply to
all existing steam-electric facilities. Shea noted that there could be a
$100-billion cost impact if all affected units were required to retrofit with
cooling towers, and warned that this could threaten reliability and lead to
premature plant closures. The final rule is expected in April.
addressed the greenhouse gas New Source Performance Standards (NSPS) for new
and existing sources that are “key pillars” of President Obama’s Climate Action
Plan. With regard to the proposed GHG guidelines for existing sources, Shea
said the industry continues to stress that “EPA should provide states with
maximum flexibility when creating compliance plans and that there should be
credit given for a wide range of actions taken to date that have resulted in
GHG emission reductions.”
be a critical year for environmental regulations, and one that certainly will
present challenges to preserving an ‘all-of-the-above’ fuel policy. While we do
not fully know what the cumulative effects of all these regulations will be on
the electric power sector, it is certain that they will have a significant
economic impact on our industry and our future generation fleet, while also
impacting our mission to keep electricity affordable and reliable for all
customers,” Shea concluded.
full briefing here.