Monday, November 15, 2010

Upbeat Utility Economics Update

When you're in the trenches with utilities looking at day-to-day challenges with a lot of granularity, it's easy to lose track of the bigger picture trends. For example, we're almost always talking about how many utility folks (internal and contracted) it takes to implement NERC CIP compliance programs. It's a lot of course, especially for orgs who always feel resource constrained ... and of course, are aging by the minute.

And the fourth version of the CIPs with its expanded scope only promise to add to the workload, and the expense.  But guess what?  High above these electric sector security and governance skirmishes float financial analysts.  Picture them as smartly suited genies on flying carpets woven from $100 bills, foretelling the economic future sector by sector.

And what are they saying of our beloved one? Here's a starter from "Utility Stocks Energized" in this past Sunday's WSJ:
"It's funny to say 'growth' and 'utilities' in the same sentence, but it's more of a growth sector than people think," says Jamie Cox, managing partner at Harris Financial. What's powering this growth? A building boom. Some higher-potential utility companies are upgrading their power plants, building out transmission lines or expanding into renewable-energy markets such as solar -- all of which could help boost future profits and dividends.
So how do you like that? As various pundits ponder the lethargic pace of the clean tech revolution and others pronounce it much ado about nothing, those in the rarefied air of the brokerages see what's plainly in front of everyone's noses, and signal that it is good.

Will "energized" investors' new flows of money further spur the infrastructure modernization and build-out of Smart Grid capabilities? How deep into a utility operation might those funds trickle down?  And if the money does come, how soon can it be expected? I might have to leave all of this to my MBA friends, but IMHO anything that communicates confidence in the economic vitality of the sector only serves to embolden the community further.

And what of security? Sounds like there are going to be a lot of new and somewhat complicated systems to protect. And maybe, maybe more so than in the past, it might just feel like there's some money available to afford the necessary protections. We'll see.

No comments: