Published Article
In Search of a Silver Lining:
The Gulf Coast Restoration Effort
September 2005
By Robert Zabors, Published in SPARK
The industry is adopting elements of a new, distributed delivery model. Several utilities are working with customers, partners and regulators to address a variety of hurdles to accelerate implementation.
The devastation following hurricane Katrina creates a situation where, among the tragic consequences, many of the economic, technological and regulatory obstacles may also have been swept away. Adoption of this approach in some areas may help restoration efforts, lower costs and provide a long-term competitive advantage for the region.
The old saying goes “in every cloud there is a silver lining.” In the clouds of Hurricane Katrina, and the devastation that followed, the silver lining may be in the form of an opportunity to reshape the electric infrastructure of the most heavily affected areas to create a long-term advantage for residents, and an example for the rest of the industry.
Slowly but steadily, the electric industry is adopting a new approach to distribution that uses proven and emerging technologies to engage customers in a mutually beneficial shaping of energy needs. This approach includes distributed generation, energy efficiency, and a variety of communication and control technologies that enable utilities and customers to better manage supply and demand.
Traditional hurdles to implementation of this model include:
- High capital cost for utilities when compared to incremental investment in the existing network;
- Low rates of customer adoption due to higher initial costs and existing applications;
- Regulatory mechanisms to compensate for the loss and deferral of traditional “rate base” investment; and
- Complexity costs for utilities in developing a new operating model in parallel with maintaining an existing, traditional one.