Power and utilities companies rank compliance and regulation as biggest concern: Ernst & Young survey

Risk surrounding cost and accessibility of capital has eased

TORONTO, April 23, 2013 /CNW/ - Responding to frequently changing regulations and managing the effect on business and stakeholders are now the biggest concerns for power and utilities executives around the world — up from 2011 — according to a new Ernst & Young survey.

"For Canadian power and utilities companies, managing changing regulatory structures in different jurisdictions has been a growing challenge," says Steve Power, partner and Canadian Power & Utilities Leader at Ernst & Young. "Improving their ability to anticipate future regulatory changes, and communicate how those changes will affect their stakeholders will be critical to their success."

Business Pulse: Exploring dual perspectives on the top 10 risks and opportunities in 2013 and beyond finds that, while governments and regulators around the globe continue to pursue low-carbon generation and energy efficiency, consumers are becoming increasingly price sensitive.

"Consumers are at the heart of the complex relationship between power and utilities companies, regulators and policy-makers," adds Power. "With electricity prices expected to increase, companies that make the most of smart technology and other innovations to shape how they interact with consumers will be better positioned for growth and profitability."

The report notes that the traditional business model of supplying, metering and billing is shifting to adapt to changing stakeholder requirements.

"The focus is moving from purely providing energy, to promoting energy efficiency," explains Power.

According to the survey the top 10 risks and opportunities for power and utilities companies in 2013 are:

Risks		Opportunities
1.	Compliance and regulation	1.	Rising emerging markets' energy demand
2.	Commodity price volatility and access to competitively priced long-term fuel supplies	2.	Acquisitions or alliances to gain new capabilities
3.	Political intervention in power and utilities (P&U) markets	3.	Growth in energy and ancillary service markets
4.	Uncertainty in climate policy and carbon pricing	4.	Enhancing relationships with external regulatory and compliance bodies
5.	Significant shifts in the cost and accessibility of capital	5.	Improving public perceptions
6.	Capital project execution	6.	Increased focus on investor relations programs and communications
7.	Economic shocks and resulting short-term energy demand shocks	7.	Integration of distributed energy resources
8.	War for talent	8.	Increased investment in generation capacity and delivery infrastructure in emerging markets
9.	Aging generation and network infrastructure	9.	Rising energy innovation in emerging markets
10.	Managing planning and public acceptance	10.	Improving onshore and offshore wind supply chain efficiency

"We're seeing Canadian power and utilities companies expand in Canada and beyond, and build out their renewable assets through acquisitions," adds Power. "But with new markets and jurisdictions come new compliance and regulation, and other issues. P&U companies really need a robust forward-view of all the risks - and opportunities - to effectively respond to change, understand what drives cost and value and engage closely with all stakeholders."

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SOURCE: Ernst & Young

Erika Bennett
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