Future of Utilities

Report Outline
Concern Over Electric Utility Tremds
Pressures on the Regulatory Structure
Conflicting Approaches to Utility Reform
Special Focus

Concern Over Electric Utility Tremds

The nation's public utilities, traditional pillars of the national economy, suddenly find themselves facing an uncertain future. It is a future fraught with hazard for the utility companies and for the public they serve. At stake may be the very survival of the utilities, at least in their present form. Without some fundamental changes, most experts believe, the nation's utilities will continue to be plagued by cash shortages, construction delays and stockholder unrest, while the general public will be confronted with ever-costlier utility bills, more frequent power blackouts or brownouts and other potential disruptions in vital services.

Of all the utilities, the electric power industry is the most troubled today, but it cannot be said to typify the nation's utilities. The electric industry is unique because it is the largest American industry in terms of total assets, the most capital-intensive industry in the entire economy, and the nation's largest fuel consumer. Electric utilities require more investment every year than any other single industry—about 12 per cent of the annual total. They have kept pace with a demand for electricity that has doubled every 10 years since 1880, far faster than the overall growth in energy consumption.

An even-faster growth of electric power in the coming years is needed, according to the official blueprint for moving America closer to the goal of energy self-sufficiency. The Federal Power Commission envisions electric power accounting for 50 per cent of total energy use in 1980, in contrast to 25 per cent today. But a host of problems which have intensified in the first half of this decade casts doubt on the ability of the electric utilities to fulfill this expanding role. Inflation and recession have hit them harder than most other industries because of the utilities' vast size and enormous needs for fuel and capital. They have been hurt by high interest rates and a money squeeze, burdened by the quadrupling of foreign oil prices, hampered by shortages of labor and materials, and pressed by high costs of anti-pollution equipment.