Responding to a Severe Economic Downturn

By: Bob Yardley, Senior Vice President

The current economic downturn will likely spare no one, including utilities and their customers, communities, and employees. While this presents operating and financial challenges for utilities, it also creates opportunities to leverage their public service standing by helping customers and communities during a time of need. However, a response calls for a sense of urgency and innovative solutions.

Our hospitals provide inspiration. Despite facing serious financial challenges, hospitals in the hardest hit areas have repurposed their organizations: converting entire floors to ICUs, reassigning and retraining staff, and engaging in outreach to other hospitals throughout the world for best practices.

Utilities face financial challenges from declining commercial and industrial sales, increased expenses, and diminished productivity. As we have learned in working with our utility clients, there are many feasible solutions to these issues. The specific response depends on where the utility is with respect to ongoing rate case litigation, the terms of an existing rate plan, and their regulatory and political environment. Regulators have a large tool kit to respond to unforeseen circumstances that impact utilities and their customers. Many utilities are assessing their options and engaging with regulators and other stakeholders to identify appropriate solutions.

These responses will preserve the financial health of utilities, but we must acknowledge the pressures that regulators and other policy makers are facing. Our team includes former regulators that served during recessions, allowing them to identify innovative solutions that address these pressures and help the hardest hit communities. This includes new innovative services and programs targeted to residential and small business customers, many of whom are impacted by the current economic downturn.

The best solutions will be those that can be designed and implemented quickly and address the needs of customers, communities, and regulators.

For more information regarding Concentric’s expertise in finance, regulation, rates, policy, grid modernization, emerging business models, and new program and service innovation, please contact Bob Yardley.

All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, or related companies. The author’s views are based upon information the author considers reliable. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.

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