STATE OF THE

2015

created by:

Here’s wHat tHe utility of tHe future looks like, 

according to over 400 u.s. electric utility executives.

ELECTRIC 

UTILITY SURVEY RESULTS

in

In association share with

Utility

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Please note: 

A disproportionate percentage of survey respondents said they 

hail from Alaska or Hawaii. Somewhat surprisingly, their results 

were not materially diferent from the mainland.

18%

17%

6% 14%

8%

8%

6%

8%

9%

6%

Where is your utility’s 

service territory located?

Pacifc West 18%

Mountain West 6%

West North Central 6%

East North Central 14%

West South Central 8%

East South Central 8%

Mid-Atlantic 8%

South Atlantic 6%

New England 9%

Non-contiguous States 17%

Every electric utility and its service territory is diferent, 

so we asked those surveyed to provide information 

about the type of utility they work for and the region 

in which they operate. 

Investor-Owned 

Utility

Municipal 

Utility

Public Power 

Agency

Electric

Cooperative

What type of utility do you work for?

57%

18%

13%

12%

DEMOGRAPHICS

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KEY FINDINGS

• Utilities will move away from the traditional vertically integrated utility model towards a more distributed, 

service-based model. 

• The industry’s three biggest growth opportunities are distributed energy resources, the customer relationship, and transmission.

• The industry’s three most pressing challenges are old infrastructure, the aging workforce, and the current 

regulatory model.

• The vast majority of utilities are seeing minimal, stagnant or even negative load growth in their service 

territories. The industry is undecided on how to best address the issue of depressed electricity sales 

growth. 

• Utilities plan to use more natural gas, solar, wind, distributed energy resources, and energy efciency 

over the next 20 years. Meanwhile, the industry expects to use significantly less coal and oil. 

• Utilities see a big opportunity in distributed energy resources, but are unsure of the best business models. 

The results of the survey make one conclusion clear: Utilities want to adapt to the changing times. What’s 

not clear yet is how.

In 2015, the U.S. electric utility is in a state of transition. 

Traditional cost-of-service utility regulation was set 

up in the early 20th century to provide America with 

universal access to electricity. But the traditional way 

of doing business may no longer work in 2015 and 

beyond. 

Emerging technologies, shifting customer expectations, 

and new energy economics are causing the industry 

to rethink the business and regulatory models that 

have served them for over 100 years.

To better understand how utilities view their present 

and future, Utility Dive surveyed 433 U.S. electric 

utility executives on the state of the electric utility 

going into 2015. The result is our second annual “State 

of the Electric Utility” report, sponsored by Siemens. 

EXECUTIVE SUMMARY

The results of the survey 

make one conclusion 

clear: Utilities want to 

adapt to the changing 

times. What’s not clear 

yet is how.

KEY FINDINGS

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What does your utility see as its biggest growth opportunity 

over the next fve years?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Centralized 

generation

Transmission

Distribution

Internet of Things

Consolidation

Other 

The customer

relationship

Distributed energy 

resources 31%

23%

8%

5%

4%

7%

9%

14%

With the rapid proliferation of distributed energy resources comes the need for utilities to better understand and engage with their customers. For the first 

time, new competitors such as rooftop solar companies are threatening to disintermediate ratepayers 

from the utility. It’s not surprising that utilities view the 

customer relationship as another big opportunity. 

The opposite of distributed energy — centralized 

generation — seems to ofer little promise of future 

revenue to utilities. Once a profit center, central station 

power is viewed by only 8% of utilities as their biggest 

Utility executives are confident in the industry’s 

growth, but they also expect to see new models 

and approaches.

Long seen as a threat, distributed energy resources 

may well become the biggest driver of industry growth, 

according to the executives we surveyed. While we 

hear frequent grumblings about the so-called “death 

spiral,” utilities view distributed energy as a massive 

opportunity.

STATE OF THE 

ELECTRIC UTILITY

A survey of over 400 U.S. electric utility executives reveals an industry that wants 

to overcome old challenges and seize new opportunities.

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70%

30%

CONFIDENT

NOT CONFIDENT

Q. What best describes your feelings about

the future growth of the U.S. electric utility industry?

grid backbone to help meet policy goals for renewables 

and distributed energy resources. Utilities then get 

paid for achieving the goals, many related to saving 

energy and incorporating cleaner resources.

Moving from one profit center to another is not easy 

for utilities since they must justify investments to 

regulators. If utilities leave the centralized generation 

business behind to provide customers with services 

like distributed solar and energy efciency, regulators 

must enable them to adopt new business models.

That’s beginning to happen in certain areas of the 

country, which may be part of why many utilities now 

see distributed energy as a significant growth opportunity. New York regulators are contemplating radical 

changes through the Reforming the Energy Vision 

(REV) proceeding, which would create a marketplace 

for the buying and selling of distributed energy.

growth opportunity. Those utilities least interested in 

centralized generation tend to do business in the 

deregulated regions of the country where regulated 

utilities cannot own power plants. 

One traditional profit center remains a constant for 

utilities: transmission. Stringing wire is a utility expertise and comes with a federal guaranteed rate of 

return. Demand for transmission has heightened in 

recent years for several reasons: the need to improve 

reliability, replace old lines, connect wind and solar 

farms to the grid, accommodate fluctuations in population, and access less expensive energy resources. 

Many utilities are contemplating how they can fold 

these varied opportunities into a coordinated business 

strategy. National Grid’s Connect21 strategy is one 

such example: It proposes that utilities build a resilient 

If utilities abandon traditional 

utility profit centers of the past,

regulators must enable them 

to adopt new business models.

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Q. What are the three most pressing challenges for your utility?

The third most pressing worry for utilities is another 

problem of age. The industry’s regulatory models are 

out of date, according to utility executives. State 

policies and regulations were designed for a system 

where utility revenue stems from electricity sales, not 

energy savings. Utilities think it’s time to shed some 

of these old rules.

The U.S. electric utility industry cannot seize its 

greatest opportunities without solving its biggest 

problems. 

Distributed energy cannot be a profit center without 

the modernized grid infrastructure that’s needed for 

grid integration. Energy efciency cannot be a utility 

business model without a new regulatory model. 

Utilities face myriad challenges in 2015. The most 

pressing challenge for utilities is aging infrastructure.

Today’s grid may not be up to the task of reliably integrating high levels of renewables, distributed energy 

resources, and smart grid technologies. The American 

Society of Civil Engineers gave U.S. energy infrastructure a barely passing grade of D+ in 2013. Utility-scale 

renewables, most of all, demand sophisticated grid 

management to accommodate for their variability in 

production. 

But it is not just the aging of infrastructure that worries 

utilities. The aging of the utility workforce is their 

second most pressing concern, according to the 

survey results. The numbers — those entering the 

industry and those retiring — aren’t balancing out. 

Workers do not gain the ability to make correct blinkof-an-eye operating decisions without years of experience.

CHALLENGES

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Q. What are the top three emerging technologies that you think your utility 

should invest more in?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Energy Storage

Carbon capture and storage

Natural gas peaking power plants

Demand response

Energy efficiency

Utility-scale renewables

Electric vehicle infrastructure

Distributed solar

Environmental upgrades

Microgrids

Coal gasification

Other

53%

41%

8%

8%

3%

18%

37%

24%

32%

27%

13%

37%

when it was only required to procure 50 megawatts. 

Meanwhile, a Texas utility is thinking even bigger — 

Oncor has floated the idea of adding 5,000 megawatts 

of storage to the grid in the coming years. 

The sudden interest in storage stems from the technology’s renewed value proposition. Battery prices 

are dropping fast and are likely to fall further as massive 

manufacturing facilities, such as Tesla’s wildly ambitious 

Gigafactory, drive prices down through economies 

of scale. 

As new technologies transform the utility business, 

where should utilities invest their capital?

The utility executives we asked were clear about one 

thing: Put money on energy storage. 

Recent activity in the storage sector backs this up. 

Utilities showed interest in storage technology at the 

gigawatt-scale for the first time in 2014. California’s 

ambitious mandate requiring the state’s big three 

investor-owned utilities to procure 1,325 megawatts 

of storage by 2020 essentially jump-started the 

utility-scale storage market. Southern California Edison, 

for example, selected a whopping 261 megawatts of 

storage through a competitive solicitation late in 2014 

EMERGING 

TECHNOLOGIES

The utility executives 

we asked were 

clear about one thing:

bet on energy storage.

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Utility executives were nearly as enthusiastic about 

clean energy. After energy storage, utilities identified 

energy efciency, utility-scale renewables and demand 

response as technologies they should invest more 

in. 

Natural gas peaking power plants took a back seat 

on the utility industry’s priority list. Given the abundance 

and low price of natural gas, this is somewhat surprising. Perhaps this is because the industry is already 

investing in natural gas and utilities are concerned 

about an overreliance on the fuel, which had disastrous 

consequences for the industry during the polar vortex 

in 2014. 

Coal gasification, carbon capture and storage, and 

environmental upgrades are not seen as promising 

investments. Very few utility executives think their 

utilities should invest more in those technologies. 

Little hope exists for carbon capture and storage in 

the near term, while “clean coal” demonstration 

projects have proven hard to finance, except in narrow 

applications where the carbon has an industrial use, 

such as enhanced oil recovery.

The results reveal that utilities are betting against old 

technologies and see opportunity in innovation. That’s 

the first step towards the grid of the future. But how 

will utilities build new business models to take advantage of these opportunities? No utility seems to 

have fully figured it out yet. Expect the question to 

preoccupy utilities and state regulators in the coming 

years. 

Utilities see opportunity in new 

technologies, but there is no 

proven model yet for 

investment and cost recovery.

Very few utility 

executives think 

their utility should be 

investing further in coal 

gasification, carbon 

capture and storage, 

and environmental 

upgrades.

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Q. If you were able to choose, which regulatory 

model would you prefer for your utility?

56%

44%

PERFORMANCE 

BASED-RATEMAKING

TRADITIONAL 

COST-OF-SERVICE 

REGULATION

“back to basics” strategies by focusing on rate-regulated activities. While most of the utilities we surveyed 

currently operate under a traditional vertically integrated model, few see that as the likely model for 

their utility 20 years from now. 

If the industry could regulate itself, what would it look 

like? 

Surprise; surprise. Most utilities would rather have 

performance-based ratemaking over the traditional 

cost-of-service model. This underscores the contentious debate over the best approach to ratemaking 

in today’s new paradigm of low electricity sales and 

high penetrations of rooftop solar. Utilities may not 

agree on which solution is best, but the results show 

that many view the old way of doing business as a 

hindrance to progress. 

Whatever the preferred regulatory model, utilities 

don’t expect the status quo to hold. Utilities will move 

away from the traditional vertically integrated utility 

model. Since the restructuring of the electricity industry in the 1990s, many utilities have been pursuing 

BUSINESS AND 

REGULATORY MODELS

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Q. What do you think your utility’s business model will be in 20 years?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Deregulated distribution utility

Traditional vertically integrated

regulated utility

54%

17%

15%

18%

24%

32%

8%

11%

10%

10%

Smart integrator utility

Energy services utility

Other

Current business model Business model in 20 years

Both models are a big step away from today’s utilities 

that make money from selling electricity, not saving 

it. The industry appears keen to build business models 

around new opportunities such as distributed energy 

resources, energy efciency, and demand response.

Despite the excitement around new business models, 

Hawaii stands as a cautionary tale for the rest of the 

industry. Its unique isolation and reliance on fuel oil 

led to the rapid and sudden proliferation of distributed generation. The percentage of Hawaiian Electric 

customers who have installed rooftop solar has surpassed 10% — the so-called tipping point at which 

industry experts believe utilities will experience significant operational and financial issues. 

A significant number of utilities see themselves becoming smart integrators. The smart integrator utility 

is a deregulated entity responsible for building, operating, and maintaining the smart grid platform on 

which new services, technologies, and marketplaces 

will rely. The smart integrator utility, whose revenue 

is decoupled from electricity sales, is expected to 

fulfill energy efciency mandates. 

An even greater number of utilities see themselves 

moving to an energy services utility model. Under 

such a scheme, the utility would not make its money 

by selling a commodity, but by operating the smart 

distribution platform and providing value-added 

services to the consumer. Energy efciency would 

become the utility’s mission and profit center. 

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Hawaiian Electric has been struggling to figure out a 

business model to adapt to the changes. Regulators 

turned down its most recent integrated resource plan, 

calling it unsustainable and overly reliant on a string 

of capital projects with no “strategic focus on the clear 

issues facing the utility.” 

In late 2014, NextEra Energy reached a deal to buy 

Hawaiian Electric amid speculation that NextEra would 

use Hawaii as a testing ground for new business 

models and solutions to distributed generation and 

renewable energy integration issues. (A NextEra 

spokesman would only say the idea was “interesting” 

when reached for comment by Utility Dive.) 

The next generation of utility business model may 

indeed come from Hawaii. The utilities there are tasked 

with solving the key challenges facing the industry 

well before they hit the mainland. Only time will tell 

what those solutions will look like.

71%

51%

48%

25%

21%

9%

Consumer infomation services

Distributed system platform

Premium power options

Other

Energy efciency and demand response

Distributed generation

Q. What new business models is your utility developing?

The next generation of utility 

business models may come 

from Hawaii.

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Q. What load growth trends are your utility 

seeing in its service territory?

23%

68%

9%

We are seeing minimal or 

stagnant load growth

We are seeing signifcant 

load growth

We are seeing negative load 

growth

Unsurprisingly, non-contiguous states reported the 

highest percentage of utilities that are seeing negative 

load growth. Distributed energy resources are more 

economical in those regions due to the higher costs 

of electricity.

The question, as always, is: What should utilities do 

about depressed electricity sales? No clear solution 

emerged from the survey. The most frequent answers 

from utilities were to develop new business models, 

regulated or otherwise.

Beyond that, there was smattering of interest from 

utilities in revenue decoupling, increased fixed bill 

charges, and premium power sales. Only 5% of utilities viewed lost revenue adjustment mechanisms as 

the best way to mitigate stagnant load growth, perhaps 

because the approach is so complex.

The drive toward new regulatory models stems, in 

part, from the stagnant growth of electricity sales.

After the recession, optimists predicted electricity 

demand would rebound with economic recovery, 

utilities would build new power plants, and profits 

would once again flow from greater electricity sales.

That no longer appears to be the case. The majority 

of utilities we surveyed reported little to no load growth 

in their service territories. The industry is struggling 

with the rise of energy efciency and rooftop solar, 

both of which eat away at demand for utility power.

The healthiest areas of load growth were seen in the 

central Southern states, where the Electric Reliability 

Council of Texas (ERCOT) and the lower half of the 

Midcontinent Independent System Operator (MISO) 

are located. The population in those regions is growing faster than in most other states, according to 

figures from the U.S. Census Bureau.

ELECTRICITY SALES

The U.S. electric utility industry 

is struggling with low sales 

numbers as a result of the 

growth of energy efciency 

and rooftop solar.

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The outlook is dim for any industry when product 

sales fall — especially if there is little hope that sales 

will rise again in the near future. When it comes to 

the challenge of stagnant load growth, the utility industry is entering an adapt-or-else period.

Energy efciency will likely need to be core to the 

utility of the future, but it’s not yet clear how regulators 

will enable utilities to make it happen. Many policymakers argue that an investor-owned utility cannot 

push both electricity sales and savings. Revenue 

decoupling is one way to mitigate the conflict of interest, although efciency advocates argue that it 

removes disincentives to efciency without actually 

incentivizing it.

Regulators will need to find new ways for utilities to 

monetize energy savings if they are to move beyond 

the commodity-based business models of the past. 

Forward-thinking utilities will even look to provide 

value-added services behind the meter — if regulators 

will allow it.

There is no clear solution 

for low electricity sales 

growth. Tellingly, the most 

common answer from utility 

executives was to develop 

new business models.

Revenue 

decoupling

Lost revenue 

adjustment 

mechanism

Develop new 

regulated 

business models

Develop new 

unregulated 

business models

Offer premium 

power options to 

customers

Increased fxed 

bill charges

Other

What is the best way for utilities to mitigate 

the impact of stagnant load growth?

17%

14%

5%

5%

22%

23%

13%

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With the Clean Power Plan taking center stage, 

utilities see a diminished future for carbonintensive fuels. The majority of utilities expect 

the percentage of coal in their fuel mix to decrease. 

Nearly half see oil declining as part of their fuel 

mix, presumably as diesel peaking plants give 

way to cleaner and cheaper alternatives like 

demand response.

Nuclear power is in limbo — and the Clean Power 

Plan only muddies the waters further. On the one 

hand, nuclear is one of the plan’s building blocks, 

which bodes well for its role in the future supply 

mix. At the same time, it is hard to envision the 

U.S. embracing a nuclear renaissance after its 

decades-long resistance to the fuel, especially 

amid the ongoing push to shut down plants like 

Indian Point in New York. Utilities surveyed 

reflected the regulatory uncertainty surrounding 

nuclear in the results — 16% see an increase in 

nuclear, 21% see a decrease, and 35% see no 

change in nuclear as part of their overall fuel mix.

Natural gas is cheap and abundant — the U.S. 

has enough of the fuel to last about 85 years at 

the current rate of consumption. It accounted for 

half of the new generation in 2013, and the Energy 

Information Administration expects gas-fired 

generation to keep growing at 1.3% annually 

through 2040.

Long dominated by coal power, the U.S. energy 

mix is changing fast. 

The utility industry’s fuel mix is changing in line 

with today’s government policies: more natural 

gas, less coal, greater energy efciency, and more 

renewables. 

Most utilities predict they will increase the amount 

of natural gas, wind, and utility-scale solar in their 

fuel mix over the next 20 years. A whopping 84% 

of utilities predict that distributed energy resources 

will also increase as part of their overall fuel mix. 

The industry’s bullish take on natural gas, energy 

efciency, and renewables likely stems from the 

Clean Power Plan, the Environmental Protection 

Agency’s (EPA) proposal to reduce carbon dioxide 

emissions 30% nationwide by 2030. 

In what is one of the biggest surprises in Utility 

Dive’s State of the Electric Utility survey, utility 

executives do not oppose the Clean Power Plan 

in great numbers. In fact, over 60% think the 

emissions regulations are acceptable as is — or 

should be even more stringent. This sentiment 

— that utilities largely support the Clean Power 

Plan — dovetails with another surprising reason 

that utility executives favor investing in clean 

energy: sustainability.

Concern over federal emissions standards has 

heightened over the last year, however. The 

percentage of utilities that listed emissions rules 

as one of their most pressing challenges doubled 

since last year’s State of the Electric Utility survey.

State portfolio standards are 

the biggest driver of utility 

investment in renewables.

FUEL MIX

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The percentage of utilities that 

listed emissions rules as one of 

their most pressing challenges 

doubled since last year.
Coal

Natural Gas

Wind

Utility-scale solar

Nuclear

Oil

Distributed energy 

resources

Hydro

Stay the same Increase Decrease N/A

How do you think your utility’s fuel mix will change over the next 20 years?

14%

17%

12%

62%

9%

35%

17%

5%

74%

72%

79%

15%

3%

16%

3%

84%

7%

4%

2%

8%

77%

21%

45%

2%

5%

7%

8%

15%

35%

27%

11%

9%

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The U.S. electric utility industry plans to increase 

natural gas, solar, wind, distributed energy resources, 

and energy efciency as part of its fuel mix over the next 

20 years. Meanwhile, the industry expects to use 

significantly less coal and oil over the same period.
But the last winter provided the industry with a 

worrisome reminder of the problems associated 

with relying on natural gas. Bitter cold sent 

electricity prices shooting skyward when parts 

of the country could not secure enough natural 

gas for their power plants. While the extreme 

cold may have been an anomaly, few are betting 

on it. Hard-hit areas like New England are fervently 

seeking ways to avert a repeat of the natural gas 

scarcity they experienced during the 2014 polar 

vortex.

When it comes to the U.S. fuel mix, it’s never easy 

to gaze into the crystal ball. What once seemed 

to be reasonable and well-educated guesses are 

often later proven to be woefully wrong. Just 10 

years ago, few imagined solar would grow so fast 

— or that coal would fall so fast. The utility view 

here is probably best seen as a snapshot in time 

— a projection of what will happen if today’s 

policies, markets and technologies stay on their 

present course for the next 20 years. 

34%

42%

28%

31%

20%

12%

9%

7%

19%

EPA should make emissions 

reduction targets and timetable 

more aggressive

Sustainability

EPA should hold to current emissions 

reduction targets and timetable

Clean energy targets or mandates

EPA should lessen emissions 

reduction targets and timetables

Emissions standards

There is no compelling reason to 

invest in clean energy

Low prices

EPA should scrap plan entirely

Q. How should the EPA move 

ahead with its plan to reduce 

carbon dioxide emissions 30% 

nationwide by 2030?

Q. What is the most compelling reason for 

utilities to invest in clean energy, such as 

renewables and energy efciency?

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and Tucson Electric Power — have received 

approval from regulators to ofer utility-owned 

solar to their customers. It is unclear if regulators 

in other jurisdictions will be willing to approve 

similar programs. 

Nearly half of the utilities surveyed are willing to 

try the new — and more daring — approach of 

buying power from customer-sited distributed 

energy. This is an intriguingly high percentage, 

given that detractors argue the practice may 

jeopardize grid reliability if pursued to a large 

degree. Utilities pursuing this strategy must answer 

The greatest challenge for the utility industry may 

be its greatest opportunity.

The vast majority of utilities see distributed energy 

resources as an opportunity. The sentiment is 

near universal across the country. The numbers 

never dipped below 70% in any region we 

surveyed. 

It’s clear that utilities want to find ways to 

incorporate distributed energy into their business 

models rather than letting competitors own the 

sector. But while there is clearly money to be 

made in distributed energy for utilities, there are 

operational hurdles to overcome, policy disputes 

to settle and no proven business model in sight. 

Of the utilities that see an opportunity, the majority 

are not sure how to build a business model around 

distributed energy resources. For the most part, 

utilities favor the more traditional approaches of 

partnering with independent third-party vendors 

and making regulated investments. 

The latter approach is highly controversial. In 

Arizona, two utilities — Arizona Public Service 

DISTRIBUTED ENERGY 

RESOURCES

Q. Does your utility see distributed energy 

resources as an opportunity?

33%

56%

12%

Yes, we see an opportunity, 

but aren’t sure how to build 

a business around DER

Yes, we are already building 

business models around DER

No, we do not see an 

opportunity

Proftability

Grid Operations

Resource Planning

Other

What is the biggest challenge your utility has 

with regard to distributed energy resources?

32%

32%

29%

8%

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the difcult challenge of system planning with 

variable generation from independent customersited resources.

Less than half of the utilities surveyed are open 

to the idea of launching competitive business 

arms to ofer distributed energy resources to 

customers. Though utilities often have unregulated 

subsidiaries, it remains a controversial practice 

with opposition from independent companies 

who say utilities will inevitably favor an afliate 

no matter the walls built by regulators. And if 

history is any indicator, competitive utility spinofs 

typically don’t do very well. It’s just not a utility’s 

core competency. 

Given this backdrop, it’s easy to see why New 

York’s Reforming the Energy Vision (REV) 

rulemaking is getting so much attention. The REV 

tries to solve many of these problems through a 

market mechanism for distributed energy 

resources similar to the one used for wholesale 

power markets. 

The REV is complex — and radical. It could lead 

to a grid where distributed energy and energy 

efciency are primary resources and centralized 

generation is secondary. Not every state is ready 

to make such a bold move, but if REV moves 

forward in 2015 as envisioned, it will likely redefine 

the debate over the grid of the future in state 

regulatory commissions across the country.

48% of utilities are developing 

new business models around 

distributed generation.

Net metering at the 

wholesale rate

Net metering at the 

retail rate

Value of solar tariffs

Feed-in tariffs

Rooftop solar should 

not be compensated

Other

What is the best way to compensate rooftop solar 

for the electricity it sends back onto the grid?

18%

6%

42%

17%

11%

7%

Other

Make regulated 

investments in DER 

where possible

Compete through 

non-regulated 

subsidiaries

Partner with thirdparty providers

Procure power 

from customersited DER

Utilities should 

not invest in DER

How should utilities invest in distributed 

energy resources? (Check all that apply)

37%

3%

53%

55%

46%

6%

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The challenge for utilities is that hackers are continuously revising their weaponry, forcing IT experts to 

reframe their defenses. Meanwhile, the very technologies meant to protect the grid from storm-related 

failures — such as microgrids and smart grid technologies — open new doors to cyberattacks.

Grid security loomed large for utilities in 2014. 

A leaked federal report found a strategic attack on 

just nine substations could cripple the nation’s electric grid and leave large swaths of the country without 

power. This came on the heels of a sniper attack on 

a Pacific Gas & Electric substation in Silicon Valley in 

2013.

Perhaps even more daunting is the growing volume 

of cyberattacks reported by Homeland Security against 

energy facilities. The energy sector was the target of 

more than half of all cyberattacks in the U.S. from 

October 2012 to May 2013.

Although utilities see themselves as the primary line 

of defense in securing the grid, most say their grids 

are not adequately protected from physical and cyber 

attacks. The vast majority of utilities surveyed are 

increasing spending to prevent attacks. 

Pressing questions loom about how easily utilities 

can recover security costs. Grid security is a new 

world for utilities and there is minimal federal guidance 

available, as the Connecticut Public Utilities Regulatory Authority pointed out in a report in April. The 

responsibility falls to state commissions, which have 

little experience preventing terrorism. 

When it comes to grid security, the stakes are much 

higher than, say, energy efficiency or employee 

benefits. Utilities will need to spend wisely and be 

prepared to educate regulators as they make the 

case for new security investments in upcoming rate 

cases.

GRID SECURITY

53% of utility executives report 

their utility’s grid network is not 

adequately protected from physical and cyber attacks.

Q. Who do you think should be 

primarily responsible for grid 

security?

57%

19%

15%

7%

2%

An independent reliability entity

State regulators

Other

Utilities

Federal government

82%

15%

13%

7%

No, it will stay the same

Yes, it is decreasing

Yes, it is increasing

My utility is not investing in 

grid security

Q. Is your utility’s investment 

in grid security changing?

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The dearth of young employees comes at a particularly bad time for the industry. Utility operations are 

becoming more complex with the advent of newer, 

smarter technologies. Utilities must adapt, but its older 

workforce is accustomed to running the grid the 

old-fashioned way. This perpetuates “the conservative, 

consensus driven culture that has challenged innovation in the industry,” according to PricewaterhouseCoopers.

Utilities are struggling to identify the best way forward 

in a changing market. Part of that challenge springs 

from the age of the industry’s workforce and the lack 

of younger and more digitally savvy forward-thinking 

employees. If the industry wants to reinvent itself, one 

of the first steps to take is to renew its workforce.

The U.S. utility industry faces a shortage of skilled 

workers as older, more experienced employees retire. 

Within utilities, concern exists that too few young 

workers are available to move up the ranks. Only 7% 

of respondents to this survey were under 30, while 

75% were 40 or older. With the U.S. economy on the 

rise, the problem may worsen as competition heightens for younger workers with technical skills.

It may be even more troubling at the top. A 50% increase in executives who became eligible for retirement 

occurred between just 2011 and 2012, according to 

PricewaterhouseCoopers. 

THE AGING 

WORKFORCE

Only 7% of utility executives 

we surveyed were under 30, 

while 75% were over 40.

Q. What best describes your 

feelings about the age of your 

utility’s workforce?

53%

36%

11%

I am optimistic because my 

utility is working to recruit 

younger workers

I am concerned about the 

fact that it is growing older

I don’t think my utility 

needs to worry about an 

aging workforce

40-49

30-39

50-59

60-69

29 and under

70 and over

What is your age range?

17%

7%

1%

22%

18%

35%

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Utilities are entering an age where they will need to 

better understand, engage with and ultimately service 

their customers. 

Unfortunately, utilities largely engage their customers 

in traditional ways and only as needed, such as for 

billing and customer support. Let’s face it — no one 

likes paying the electric bill and customers usually 

only call support when they have a problem. Similarly, 49% of utilities engage their customers around 

power outages — not exactly what one would call a 

positive moment for the customer, though it remains 

a necessary endeavor. 

Perhaps indicative of the future, many utilities cited 

community education and outreach, energy conservation tips, service offerings, and discounts and 

promotions as ways they engage their customers. 

These are all types of services that utilities will need 

to ofer their customers if they choose to pursue a 

less commodity-focused business model, as many of 

the executives who took Utility Dive’s State of the 

Electric Utility survey have indicated. 

It’s common industry wisdom that customers simply 

don’t care about energy unless they get an exorbitantly high bill or are hit by a power outage. That may 

be true today, but a report from New York’s REV 

proceeding suggests that access and technology play 

a big role in engaging customers. The industry is just 

beginning to install the technology — and create the 

market access — that could give customers new and 

important reasons to not only care about, but engage 

with their energy usage. 

THE CUSTOMER 

RELATIONSHIP

The utility industry has entered 

an age where they will need to

better understand, engage 

with and ultimately service 

their customers.

Q. Is your utility’s investment 

in customer engagement 

changing?

76%

17%

4%

2%

No, it will stay the same

Yes, it is increasing

Yes, it is decreasing

My utility is not investing in 

customer engagement

Community 

education and 

outreach

Conservation tips and 

peer comparisons

Billing and customer 

support

Energy usage data

Service offerings

Discount and rebate 

promotions

Demand response 

events

Other

Power outages

What are the top ways in which your utility 

engages its customers? (Check all that apply)

58%

50%

45%

34%

2%

49%

63%

58%

72%

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The U.S. electric utility in 2015 is transforming to 

become the utility of the future. 

The utility of the future will have a diverse fuel mix, 

including solar, wind, natural gas, energy efciency 

and distributed energy resources. The utility of the 

future will provide the smart grid platform for new 

energy technologies and services. The utility of the 

future may even provide some of those services and 

technologies to the consumer, who is ultimately at 

the heart of everything the utility of the future does. 

The utility of the future’s revenue will not come from 

electricity sales, but electricity savings, in order to 

better align the utility business model with societal 

goals.

There will be no one path to the utility of the future, 

given that each utility is governed by at least one of 

50 diferent state regulatory bodies. But the foundation 

will likely be the same across the country. The outcome 

of New York’s REV, in particular, could prove instructive 

for utilities and regulators across the country. 

Utilities know a smart distribution platform and new 

energy services are the foundations of the industry’s 

future. It’s simply a matter of figuring out how they 

will make it happen.

A smart distribution platform 

and new energy services are 

the foundations of the 

utility industry’s future.

LOOKING AHEAD

in

share

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