SINCE 1973, the wholesale price of electricity has risen by 243 percent. As prices soared, industrial users -- who consume large amounts of electricity and who face the inexorable reckoning of the bottom line -- reacted quickly. In the space of a few years, industry made large improvements in the efficiency of its energy use, allowing manufacturing output to grow substantially while energy use stayed constant. But until very recently, smaller customers in the residential sector remained relatively unaffected -- except for their constantly growing bills.
Now a quiet revolution is under way that should soon begin to affect individual bill-payers. With a powerful push from several recent federal laws, the nation's public and privately owned utilities are beginning to look for ways to adapt to an entirely new way of doing their business.
Throughout the 1950s and 1960s, utilities served their customers, the nation's economy and their own stockholders by promoting the use of more and more electricity. This was the period of the all-electric home and utility-sponsored advertisements for electric hot water heaters, toothbrushes and the rest. Low fuel costs and larger, more efficient, new power plants meant that the price could be lowered as use rose. When these economies were exhausted, utilities turned to leveling their loads by, for example, promoting the sale of more electric heating in areas with high demand in summer.
Now the interests of the utility and those of it customers have diverged. Above all, the customer wants to lower his energy bill. If he can find lower-cost ways than utility-supplied electricity to meet his energy needs, he will use them. As it turns out, there are a host of promising alternatives. This leaves utilities with a choice. They can continue to insist that their business is just to sell electricity and watch costs climb as demand and profits fall. Or, they can reshape themselves into energy service companies whose goal is to meet their customers' energy needs by whatever means cost least -- conventional power, conservation technologies or renewable resources. They can resist the future or embrace it.
On the whole, the utility response has been terribly cautious and slow. The more ambitious plans have been taken under duress. For instance, GPU, the parent company that had to swallow the catastrophic costs of Three Mile Island, has adopted a completely revised plan for the future that involves everything from heat recovery systems to cogeneration plants to individual customer conservation services. The company plans to spend a half-billion dollars on this new program, and thinks the program will save it four times as much.
Yet most companies that have not been forced to do things differently are still reluctant to try. Nevertheless, the change is coming. Increasingly, customers and investors will be able to tell which are the well-managed, innovative utilities. Public awareness of what needs to be done will do a great deal to force a faster pace. The faster it happens, the better off the nation will be.