Getting Proactive with Threats
The Future of the Business
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BY MARTIN ROSENBERG Editor-in-chief, EnergyBiz |
Entergy is learning its lessons and forging a proactive path towards its future, says Leo Denault, the company's chairman and chief executive officer. His edited comments from a conversation with EnergyBiz follow.
ENERGYBIZ: What challenges are ahead for the utility business model?
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| Denault |
DENAULT: There's a lot of activity in the energy efficiency space, the distributed generation space with microgrids, demand-side management and different regulatory structures. You see a lot of interesting dynamics as relates to the industry. Our view is that we need to be proactively looking at what the threat to the business model and the monopoly will be technologically and public policy-wise, as well as from a regulatory standpoint, both at the federal and the state level. We need to find solutions as opposed to putting up barriers. We need to be the ones that determine what the future business model ought to be and whether it includes what we traditionally do or not. Then we need to be able to find a way to participate in that future model in ways that are different from what we've done in the past.
ENERGYBIZ: How do you guard against your team getting gun shy after these last two forays?
DENAULT: We have to continually focus on lessons learned. We need to be a lot more proactive with our regulators around what that future holds. We have to be a lot more constructive with our regulators around the different ways that it can be accomplished long before we go to them with a transaction.
ENERGYBIZ: Do state regulators understand the changes in the utility business?
DENAULT: There is a lot of education that the industry has to get, period. Then, the regulators will get it as well. It's not going to be one single technology that wins out over all. There's going to be a combination of factors that go into what's next and the industry has to figure that out, and we haven't yet. A lot of things are public-policy driven. Technology choices are mandated. It may not make all the economic sense in the world, but once it's subsidized and once the programs are put in place, it happens. We have to deal with productivity enhancements that are occurring outside of our business, whether it's in solar panels, windmills, microgrids, battery technology or electric vehicles. How do we understand the real energy economics of all of that? How do we find the right solution set for our customers that will be economically sound, environmentally sound, a good choice for reliability and a good choice for cost structure? And it should not shift burdens from one customer class to another or be regressive.
ENERGYBIZ: As you sit down with regulators in Arkansas, Louisiana, Texas and Mississippi in the next six months, what will you be telling them about deals that you hope to consummate five years from now?
DENAULT: Whatever those deals might be, they've got to be lined up, first and foremost, with our mission: to create sustainable value for our owners, our customers, our employees and the communities we serve. Beyond that, I'd be getting out in front of myself if I started talking about deals we might do.
This is the second of a series. Last week in View from the Top: "Entergy Gets Focused."
Read more: "Entergy's Spin-off."
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http://www.fierceenergy.com/story/nma-fossil-fuel-regulations-must-reflect-balance/2014-06-15