The top five issues facing utilities this year are physical and cyber security, distributed energy policy, rate design reform, aging grid infrastructure and the reliable integration of renewables and distributed energy resources, according to the results of a survey of professionals in the utility industry.
The survey found that 72 percent of respondents see physical and cyber security as either "important" or "very important" today, making it the most pressing issue for the sector in 2017, the 2017 "State of the Electric Utility Survey" of Utility Dive readers found. The results of the survey were disclosed in late March.
With respect to distributed resource policy, 33 percent of respondents listed this issue as important, while 32 percent said it was very important. For rate design reform, 31 percent listed the issue as currently important, while 32 percent said it was very important. As for aging grid infrastructure, 34 percent of survey respondents see it as important today, while another 28 percent say it is very important. The reliable integration of renewables and DERs was listed by 32 percent of respondents as important and very important by 28 percent.
Meanwhile, state regulatory model reform, the aging utility workforce, changing consumer preferences, compliance with state power mandates and stagnant load growth rounded out the top ten issue responses to the Utility Dive survey.
The 2017 State of the Electric Utility Survey was based on an online questionnaire offered to Utility Dive readers in January. More than 600 electric utility employees from the U.S. and Canada took the survey. Of the respondents to the survey, 54 percent listed investor-owned utilities as the type of utility that employs them, followed by municipal or public power utility (32 percent) and electric cooperative (14 percent).
Survey responses in 2017 represented both continuity as well as a gradual shift in priorities, Utility Dive said.
Two years ago, respondents listed aging infra¬structure, the aging workforce and their current regulatory models as the three most pressing challenges for their utilities, followed by stagnant load growth and federal emissions standards. At the time, physical and cyber security ranked sixth.
In 2016, responses followed a similar pattern, Utility Dive said. "Utilities ranked the aging workforce, existing regulatory model and aging infrastruc¬ture as their top three concerns, followed by renewables integra¬tion and stagnant load growth. Physical and cyber security again ranked sixth," the report on the survey's findings said.
"Concern about those same issues persisted in 2017, but a large number of respondents indicated they are not as pressing as the issues of grid security, DER policy and rate design," Utility Dive reported.
Utilities most confident in growth of utility-scale solar, DERs, wind, natural gas
Beyond the top issues that survey respondents listed for 2017, the report details other key takeaways from the survey.
Among other things, the survey found that utilities are most confident in the growth of utility-scale solar, distributed energy resources, wind energy and natural gas generation over the next 10 years. They also expect coal generation to decline significantly, while nuclear generation will stagnate or retire, depending on the region.
With respect to DERs, "utilities were most bullish about the growth of rooftop solar in their service areas, followed by demand-side management and behind-the-meter storage," Utility Dive said.
Meanwhile, most utility executives do not expect the election of Donald Trump to the presidency to alter the outlook for generation resources in their service areas. "The lone exception was coal — nearly half of respondents indicated they now have a ‘more positive outlook' on the future of coal after the election. Still, few expect to deploy more coal capacity at their own utilities," Utility Dive noted.
Trump in late March signed an executive order that directs the Environmental Protection Agency to start the process of re-evaluating the Clean Power Plan, the EPA's final rule to restrict carbon dioxide emissions from coal-fired and other fossil fuel-fired power plants.
The survey also found that uncertainty over future energy policies and market conditions "is considered by utilities to be the most significant challenge associated with the changing power mix, followed by minimizing customer costs and reliable integration of new generation technologies."
Survey sheds light on priorities by region, utility type
The survey found that physical and cyber security, DER policy and renewable energy and DER integration were national concerns, with a majority of respondents from every U.S. region indicating they are "important" or "very important" today.
Rate design reform and aging infrastructure were also national concerns, listed as "important" or "very important" by a majority of respondents in every U.S. region except one.
Physical and cyber security concern was greatest in the South and Southeast, where 84 percent indicated it is either "important" or "very important," followed by the Southwest and South Central (73 percent).
Meanwhile, DER policy concern was greatest among respondents from the West Coast, where 79 percent indicated it is "important" or "very important," followed by the Great Plains and Rockies (77 percent), and New England (77 percent). "Those regions feature states with both robust DER growth and utility reform dockets to reshape power sector business models for DER deployment," Utility Dive noted.
At least 60% of respondents from all utility types indicated DER policy was either "important" or "very important" today. According to the survey findings, 71 percent of electric cooperative respondents chose one of those options, followed by IOUs at 67 percent and public power utilities at 61 percent, "indicating that many cooper¬atives are seeing DER growth in their service areas."
Rate design reform was of most concern to the West Coast, where 71 percent indicated it was "important" or "very important," followed by those from the Great Plains (66 percent). Respondents from the Midwest (49 percent) were the least concerned, the survey found.
In addition, 63% of IOUs and 61% of public power utilities indicated they consider rate design reform to be "important" or "very important," compared with 49% of co-ops.
Aging infrastructure was of most concern to West Coast respon¬dents, with 75 percent of respondents from that part of the country listing it as "important" or "very important," followed by New England respondents (67 percent). Those from the Southwest and South Central (48 percent) were the least worried, "indicating aging infrastructure is more of a concern in juris¬dictions with DER growth and utility reform efforts," Utility Dive said.
Rate design reforms
Diving deeper into rate design reforms, the survey report noted that time-of-use rates were most popular, with 43 percent of respondents choosing them for all customers and 28% choosing them for distributed generation customers.
TOU for all customers was most popular in the West Coast (53 percent) and New England (52 percent) and least popular in the Southwest (27 percent). TOU for all customers was more popular among cooperatives (50 percent) than public power (43 percent) or IOUs at 41 percent.
Fixed charge increases for all customers got support from 40% of respondents, while increasing them for DG customers only received 24%.
Fixed charge increases for all were especially popular in the Great Plains (54 percent) and the Midwest (48 percent) and least popular in the Mid-Atlantic (30 percent) and Canada (18 percent). Respondents who work for cooperatives were more likely to choose fixed charge hikes for all (61 percent) than public power (38 percent) or IOUs (35 percent).
The full survey results are available for download here.