A Smart Grid Requires Smart Utilities

by Richard T. Stuebi

In my more cynical moments, I might quip that the phrase “smart utility” is oxymoronic.

For sure, most utilities remain captive to technologies that are decades old. And, unquestionably, some utilities are managed by people and within cultures that seem to be stuck in the middle 20th Century (or even more obsolete).

But, some utilities are clearly more advanced than others. In an article published in the July/August edition of Intelligent Utility, Rick Nicholson and H. Christine Richards of IDC Energy Insights provide their assessment of which utilities are leading the pack towards a “smart grid”.

A clear pattern emerges: the first six utilities at the top of the list – Sempra Energy (NYSE: SRE), Austin Energy, Edison International (NYSE: EIX), Oncor, PG&E Corporation (NYSE: PCG) and CenterPoint Energy (NYSE: CNP) – are all based in either California or Texas.

In these two states, the combination of retail energy competition and policies to support renewable energy and energy efficiency has spurred these utilities to be ahead of the pack relative to their peers elsewhere in the country. In turn, this should serve them well as they build new business models for the electricity business in the 21st Century.

There are probably many observers that would claim that the significant electricity policy changes over the past 10 years have harmed Texas and California more than they have helped. Perhaps. However, longer-term, legislators and regulators in Texas and California have arguably done their citizens and their utilities a great favor by pushing the policy envelope, because it is likely that customers in these states that will soonest benefit from the adoption of smart grid technologies.

Smart utilities are the future. Those utilities that didn’t show up on this list are at risk of being left out in the dark as the electric industry transforms itself in the coming decades.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also Managing Director of Early Stage Partners.

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