Business models are evolving to suit a shifting industry landscape.
Andre Begosso (andre.p.begosso@accenture.com) is a senior executive in Accenture’s utility strategy practice and is located in Detroit. Jack Azagury (jack.azagury@accenture.com) is a senior executive at Accenture and leads Accenture’s management consulting business for the resources industries; he is located in New York. Tim Porter (timothy.p.porter@accenture.com) is a senior executive in Accenture’s utility strategy practice and the retail lead for utilities. The authors acknowledge the contributions of Curtis Bech, manager in Accenture’s utility strategy practice.
The next 10 to 15 years will be among the most disruptive the U.S. utility industry has witnessed in more than 50 years. While utilities have faced change in the last three decades, including deregulation, re-regulation, the rise and fall of the merchant model, and new Clean Air Act regulations for SO2 and NOx, the structure of the industry has remained fundamentally unchanged. In addition, all of these changes have been mostly sequential, allowing utilities to focus on the one issue at hand.
Today, the reality is different. There are many forces at play simultaneously—for example, mergers and acquisitions, smart grid development, customer activism, environmental regulations and new technologies—and the industry is being forced to confront these trends, while at the same time facing unprecedented political and regulatory uncertainty.
Utilities will need to undergo significant change in order to respond to this challenge, but many will be hampered by a lack of long-term planning, a disbelief among C-Suite executives that the future will truly be different (namely “we’ve heard this all before!”), an economic recovery fraught with uncertainty, and a regulatory and legislative framework that’s ill-suited to driving the required level of change.