Today’s Challenges in the Utility Industry 

First things first, what are today’s challenges for utility companies? The simple answer is that there are many of them and they are quite complex and multi-faceted. On the one hand, utility providers today must deal with a long list of external pressures and requirements. Among them are things like:   

1. Contending with having to paint within very strict lines established by the global, federal, state, and local regulations,  
2. Responding to often unpredictable conditions arising from natural disasters and extreme weather,  
3. Facing soaring power consumption amidst electrical vehicle and data center market growth, just to name a few,  
4. Navigating within aging and often crumbling infrastructure,  
5. Meeting increasingly aggressive decarbonization and energy transition goals, 
6. Attending to stressed-out consumers who are squeezed by the current economic conditions,  
7. Negotiating often unfriendly media and social media climate, 
8. Attracting investments amid uncertainty brought about by the demise of the Chevron Doctrine, etc. 

On the other hand, there are also internal issues that utility providers, like any other company today, must negotiate strategically to succeed. Among the internal issues are: 

1. Poorly trained personnel,  
2. Cultural, language, and communication barriers,  
3. Lack of proper qualifications,  
4. Psychosocial factors, including mental well-being, 
5. Intergenerational struggles, etc. 

To all the above could be added the financial pressures of remaining soluble and profitable, without which there is no future. And this list only scratches the surface.  

So, the goal of this presentation, then, is to unpack the challenges and identify simple principles, that will result in a sustainably safer tomorrow for the utility providers and happy and fulfilling jobs for the workers in this industry. 

Regulatory Challenges 

Take painting within the strict lines of regulatory and corporate requirements for example. Global organizations and treaties, like the World Economic Forum, United Nations, World Health Organization, Paris Accord, and others have set out specific requirements and guidelines, which may or may not be enforceable within various geographies around the world. On a national level, the United States serves as a good example of the multi-faceted web of regulations for utility providers. Here in the U.S., utilities are regulated by both the Federal Energy Regulatory Commission, and state and municipal public service commissions, all of which exist to ensure that consumers have access to reliable, safe, and secure energy at a reasonable cost. In addition to that, many of the utility companies, the municipalities that own them, or their holding companies have committed them to the Environmental Social Governance requirements, which can take a lot of time and energy, to speak nothing of additional resources. 

Weather Challenges 

Weather has always been unpredictable and even the best of planning and preparations can still be quickly exhausted by either a significant storm, like Hurricanes Andrew or Katrina, Typhoon Tip or Haiyan, or by a series of smaller events happening almost in tandem with one another. This was witnessed in Houston just this year when Beryl, which struck the Texas coast as merely a Category 1 hurricane on the morning of July 8th ended up causing the death of at least 36 people and leaving almost 3 million residents without power for close to two weeks amidst the sweltering summer heat. The reason for this unprecedented devastation by a relatively minor storm was that it was the third storm to strike the nation’s fourth-largest city in less than two months. Since repair crews will often perform the quickest possible fixes to bring the power back on, after which they could work on the longer term more permanent fixes, in this case, there was no time for them to complete the permanent fixes, which left Houston area exposed to significant impact.  

Increased Demand Challenges 

The world’s growth in demand for electricity, for example, in 2024 and 2025 and beyond is forecast to be among the highest levels in the past two decades, according to the International Energy Agency. Two of the biggest drivers for this load growth are data centers and electric vehicles.  

The continued expansion of the Internet of Things and AI is fueling a tremendous uptick in data center development and construction. According to the American Public Power Association, the combined expansion of traditional and AI data centers, along with chip foundries, will increase demand cumulatively by 177 terawatt-hours from 2023 to 2030, reaching a total of 307 TWh.  

Electric vehicles will emerge as the second major catalyst for power demand growth in the US and around the world up to 2030. As an example, in 2023, electricity consumption in the U. S. transportation sector totaled 18.3 TWh. By 2030, this figure is projected to soar to 131 TWh. Between data centers and EVs, there is close to 300 TWh projected increase in U.S. electricity demand by 2030. 

Likewise, the end-use electricity demand in Canada is growing by as much as 35% between 2005 and 2050. To meet this tremendous increase in demand, all of Western Europe except for Germany is accelerating nuclear power programs. For the utility industry to continue on it current path, capacity planning must become more advanced and more specific to help distribution utilities anticipate system upgrades that will be needed for future waves of electrification and capacity constraints (Figure 1). 

Figure 1: Illustrative 24-hour electrical load curve in 2024, 2030, 2050 (US DOE). 

Infrastructure Challenges 

The growth in demand above is especially challenging, given the present state of the utility infrastructure. Experts say that U.S. infrastructure is both dangerously overstretched and lagging that of its economic competitors, particularly China. While there has been a significant amount of upgrade projects completed in the past decade in certain parts of the United States, there is still much work to be done, as the average age of the transmission infrastructure in the U.S. is 40 years and, in the UK, dating back to World War 2. The estimated cost of transmission modernization in the United States ranges from $1.5 to 2 trillion by 2030, and this is on the low end. 

Decarbonization Challenges 

Then there is the push for energy transition. A growing group of U.S. electric companies has committed to cut carbon emissions by 80% by 2030. In fact, at present 23 U.S. states, as well as the District of Columbia and Puerto Rico have adopted some form of 100% clean energy goals (Figure 2). Yet at the same time, most stakeholders are under-prepared for the enormous investment that meeting these decarbonization goals will require. 

Figure 2: 100% Clean Energy States (Clean Energy States Alliance) 

Meeting decarbonization goals means the United States needs anywhere from 1.3 to 2.9 times the current transmission capacity, according to the National Renewable Energy Laboratory estimate. How so? Here is an example that perfectly illustrates this dilemma. Nearly 60% of New York state’s demand comes from New York City. This demand was until recently largely met by fossil-fuel plants in and around the city. As those are replaced by hydroelectric plants, wind farms, and solar plants, the power supply moves further away from the source of demand, putting more pressure on the transmission system to shuttle volumes of electricity it was never built to handle, thus the reason for increasing transmission capacity. And the U.S. is not alone in the need to upgrade its infrastructure for the sake of energy transition. Germany had to upgrade its capital spend predictions to €61bn between now and 2030, which is almost double of its initial estimate of €33bn from 2017.  

The challenge of Attending to Consumers Squeezed by the Economy 

The state of the economy and the price increases on everything from groceries to gasoline, to housing, and insurance are making it more difficult for the average consumer to afford something as basic as their utility bills. This presents a challenge for the providers in balancing their own profit and loss statements while finding creative ways to help their customers stay afloat. This challenge is further exacerbated by the media and the social media’s often less than fair coverage of the utility providers who are often pitted against the consumers and painted in a negative light. And now, the recent Supreme Court Chevron decision is also going to potentially impact investor willingness to participate in the electrical transmission industry. 

While this paper has gone to great lengths to establish the extensive nature of the external pressures and challenges faced by the utility providers, some may wonder why this was necessary and how it is relevant to the topic at hand. The fact of the matter is that a purely cursory overview of the external challenges may result in a lack of appreciation for the tremendous amount of pressure that these challenges add to the internal issues. Because at the end of the day those individuals who comprise the workforce within the industry are the very same frazzled people who are impacted by the weight of the external challenges.  

Workforce Training Issues 

A significant variation in the training standards from state to state and from company to company means that not all utility workers are equally trained. Some are not willing to put in the three to four years of fieldwork that it takes to become a fully qualified lineman able to work directly on electrical equipment. And others may need to be retrained from the previously wrong ways in which they were brought up.  

Cultural Barriers 

Wars, conflicts, and migration influxes have contributed to the increasingly diverse workforce around the world. Taking the U.S. as an example, with a recent significant influx of people from all over the world into the country, language, and communication barriers are becoming more of an issue daily. Greater globalization of the workforce means that interpersonal challenges are much deeper than just language and communication. Cultural values and norms must be considered, such as what constitutes right and wrong or good work vs “good enough” work, among other things. Having grown up outside of the U.S., this author personally experienced many of the things referenced above. These challenges necessitate consistent efforts on the part of the employer to ensure clarity.  

Employee Qualification Standards 

Fitness, drug and alcohol, education, certifications, and other employee qualifications must be met and managed to enter the utility industry ranks. Many of these qualifications must be renewed and otherwise upheld from year to year. When access to high-risk environments must be controlled based on these qualifications, and this access must be managed for not only employees but also contractors and subcontractors, keeping up with all of this could quickly and easily become unmanageable. The good news is that there are suppliers whose whole job is to qualify, verify, and track these data points for their clients.  

Psychosocial Issues 

Various psychosocial challenges can limit and greatly impair utility workers’ ability to focus and perform their work effectively and safely. Among these are anxiety and depression, eating disorders, and psychotic disorders. The psychotic disorders are particularly interesting as many of them are caused by cannabis use, which is greatly on the rise today, both in the U.S. and many other countries around the globe. Astute employers will ensure the presence of the appropriate policies and protocols to both control drug and alcohol usage within their jurisdictions and offer assistance options to those who need them. 

Intergenerational Challenges 

We are experiencing the first occurrence in work history when five different generations may be found in the workplace at the same time, all the way from the Silent Generation to Gen Z. This is especially critical as each generation has a distinctly different set of values, communication styles, approach to work and much more. If tackled with the right tools, the intergenerational aspect can be a significant asset for an organization, but it can also present tremendous challenges if it is viewed as a tug-of-war. 

Practical Solutions for the Utilities 

What steps must be taken to overcome the challenges and construct the foundation for sustainably safer tomorrow in utilities? 

On the governmental level, be it national governments, state or regional legislators, or municipalities, here are a few recommendations: 

• Exercise care so as not to produce conflicting regulations, much like in the case of the loosening of the marijuana restrictions while continuing to test for its presence. 

• Consider what unintended consequences your new regulations will have on those under your jurisdiction, as in increased cheating on drug tests due to the prevalence of some drugs created by relaxation in enforcement. 

On the corporate level, there are no shortcuts to achieving the right culture. A two-pronged approach should be considered:  

• Tackling the company culture. The culture of safer thinking begins with the executive office and must be integrated into every level of your organization, from communication to company functions to values, to mission, to expenditures, to rewards and recognition, to planning and scheduling, and everything else in between. The culture of safer work is arrived at by creating systems that make it difficult for incidents to occur, make it impossible for those incidents to kill or hurt someone, and make it easy for everyone to do their daily jobs. While building a safer culture may take time and consistent and considerable effort, the benefits of doing so cannot be overestimated, ranging from employee satisfaction, higher engagement, increased productivity, decreased absenteeism, increased profits, and happier clients. In short, as someone once said, you can buy your employees’ hands and backs, but you must win their hearts and minds. The right culture does that. 

• Obtaining/providing the right tools for your workers. Obtaining the right tools is equally important. There is nothing more frustrating and demoralizing than your personnel wanting to do the right thing because of the progress you are making in culture building yet being unable to do it because of the lack of tools. Of the many tools to be considered, how you manage your supply chain risk must not be overlooked. Find the right solution and you will find peace of mind related to operator qualifications, tracking and administering drug and alcohol requirements, contractor management, contractor communication, staying on top of training and qualifications, insurance agreements, and such. You will also gain immediate relief in risk management and mitigation, streamlined communication, documentation and compliance tracking, emergency preparedness, and data-driven decision-making. 

On the individual utility worker level, your employees need to remember and be reminded on a consistent basis about the connection between their work and home lives. A worker has one body. 

• What you do to it at home will most certainly impact your ability to perform effectively, efficiently, and safely at work.  

• What you do to it at work will have a tremendous impact on your ability to be there for your loved ones, to participate in and share their important milestones, and so much more at home.  

So, how should your employees treat their bodies to do their part towards a sustainably safer tomorrow for the utility industry? Pay attention to things like your stress level, your work-life balance, your nutrition, your alcohol intake, your choice to partake or not to partake in recreational drugs, your mental state, your spiritual state, and your sleep habits. Though there is often a temptation to feel invincible, our bodies will only respond by how we treat them. This is true with any other tool or equipment you use in your daily activities, and it is true of your body as well. 

Take sleep, for example. Is your average number of sleep hours within the recommended range for your age (for adults 18-64 years, it should be 7-9 hours)? If not, you place yourself in a higher risk category for developing several medical conditions, including inflammation, stroke, heart attacks, Parkinson’s, Alzheimer’s, and anxiety and depression. Additionally, your productivity is going to decrease, as will your ability to focus, concentrate, and maintain your emotions under control.  

Then you also place yourself and those working with you at a higher risk for workplace injuries and death. This paper’s scope does not allow an in-depth discussion of all the significant incidents that resulted from sleep deprivation, like the Three Mile Island Nuclear Disaster, the Space Shuttle Challenger explosion, the Chernobyl Nuclear Plant devastation, or Exxon Valdez spill. Suffice it to say that the list of incidents is long and quite convincing. While no one in their right mind would want to add their employer’s name to the list, many if not most of us knowingly take many steps that all but bring us to that edge almost daily. 

Summary and Key Takeaways 

In conclusion, utilities, unlike many other industries, are facing unique and complex challenges today. These cannot be ignored, for they will not go away in this manner. These challenges are comprised of external pressures from outside utility providers, such as regulatory environments, infrastructure conditions, and decarbonization goals. The challenges faced by the utility industry must be tackled head-on wisely and methodically. 

At the same time, on the other hand, some of the internal personnel and culture issues that are faced by utility providers today are no different from any other industry. Every employer must overcome problems with sufficient training, clear communication, and intergenerational challenges. Those who are fervently planting the seeds of building the right culture and investing in their personnel via the right contractor management tools will reap the benefits of a sustainably safer tomorrow.  

Sources Cited: 

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2024 Power and Utilities Industry Outlook. Jim Thomson, Kate Hardin, and Suzanna Sanborn. December 4, 2023. Deloitte Research Center for Energy & Industrials. Available from https://www2.deloitte.com/us/en/insights/industry/power-and-utilities/power-and-utilities-industry-outlook.html  

Data Centers, EV Expansion Create Around 300 TWh Increase in U.S. Electricity Demand by 2030. Paul Ciampoli. July 1, 2024. American Public Power Association. Available from https://www.publicpower.org/periodical/article/data-centers-ev-expansion-create-around-300-twh-increase-us-electricity-demand-2030#:~:text=The%20US%20residential%20sector%20is,as%20heating%2C%20cooling%20and%20cooking. 

Global Electricity Demand Set to Rise Strongly This Year and Next, Reflecting its Expanding Role in Energy Systems Around the World. July 19, 2024. International Energy Agency. Available from https://www.iea.org/news/global-electricity-demand-set-to-rise-strongly-this-year-and-next-reflecting-its-expanding-role-in-energy-systems-around-the-world  

The State of U.S. Infrastructure. James McBride, Noah Berman and Anshu Siripurapu. September 20, 2023. Council on Foreign Relations. Available from https://www.cfr.org/backgrounder/state-us-infrastructure 

Why ESG is Important in the Utility Industry. Blog on hsi.com. Available from https://hsi.com/blog/esg-important-in-utility-industry