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By Gerry Fox

Recent technological and economic events are poised to transform the electric utility industry. Described as “game changers” by industry thought-leaders, these “disruptive challenges” stem from a convergence of factors.

1 Distributed energy resources (DER) and demand-side management (DSM) programs continue to capture market share, resulting in lower revenues, higher integration costs, lower profitability, and potential credit impact.

2 Existing regulatory process and tariff structures challenge the ability to recover lost revenues (albeit, slowly changing). New government programs incentivize certain technologies.

3 Environmental sensitivity includes legislative mandates for cleaner technology, as well as customer and public pressure to become environmentally friendly.

4 Customers demand a more consistent, relevant and personalized customer experience, leveraging mobile and social interactions.

5 Pervasiveness of data is the Big Data tsunami in volume, velocity, variety, and complexity. Analysis is beyond the capabilities of legacy and traditional software, architecture and processes.

6 Consumers live and work in a “connected world”. Electric utilities are facing cybersecurity challenges and customer privacy concerns. The fifth version of North American Electric Reliability Corporation’s (NERC’s) Critical Infrastructure Protection (CIP) standard significantly strengthens security requirements.

7 Consumerization of energy production ruptures the utility’s grid operating model (for example, microgrids, and de-centralization). Due to the accompanying unpredictability, long-term horizon planning is difficult.

8 Slowing economic growth trends and rising electricity prices are occurring in certain areas of the United States.

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