Political intervention ‘main threat’ to utility companies

Political intervention through changes to energy policies is seen as the greatest threat to the future of power and utility (P&U) companies, a new poll suggests. Based on a survey […]

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By Priyanka Shrestha

Political intervention through changes to energy policies is seen as the greatest threat to the future of power and utility (P&U) companies, a new poll suggests.

Based on a survey of 110 P&U senior executives from 20 countries, the “fast-paced” change of regulations was highlighted as the highest priority of risk. Price volatility and access to competitively priced long-term fuel supplies are the second biggest risk, according to Ernst & Young’s new report.

Richard Postance, Power & Utilities Advisory Leader said: “Given its potential impact on everything from half-century capital planning to customer operations, political intervention is seen as a significant risk for the P&U industry, even in markets like the UK that have been considered stable and transparent. In a world of rising energy prices we are seeing a real fear amongst utilities of ending up on the wrong end of expedient, but shortsighted political action.

“Since political intervention is expected to continue as energy policy evolves utilities cannot take a back seat in the engagement of their consumers. Without prior education and a trusted relationship consumers will perceive ‘it is government policy’ as an excuse, not a reason.”

The top three business opportunities highlighted for this year and continuing into 2015 were the rising energy demand in emerging markets, acquisitions or alliances to gain new capabilities and growth in energy services markets.