The saying goes that bigger is better, but in the utilities industry, the effort to deregulate has shifted the focus to smaller, more agile and competitive companies.
Since the early part of the 20th century, the production and distribution of gas, electric and other power sources has been controlled by government. Following the oil crisis of the 1970s and the breakup of the telecommunications industry in the 1980s, industrial users of electricity lobbied for deregulation, hoping for the lower prices that typically result when companies compete with one another for customers. In 1996, an order from the Federal Energy Regulatory Commission thrust deregulation into the industry's vocabulary, requiring energy producers to allow all power marketers access to their transmission lines.
States such as California and Massachusetts were among the earliest to nudge utility companies out of their regulated nests and into the open market. The market consists of several segments, however, and the categories are in varying stages of realignment. Power generators now compete with one another to sell their product on the wholesale market to power marketers. These purchasers can then sell to one another or directly to consumers. (The means for actually distributing electricity, gas or water remains a regulated system; the government doesn't want to see the country choked by new pipelines and transmission wires.)
"The wholesale and retail markets have already been deregulated to a large degree," says Michael Tyndall, media relations representative for Southern Co. in Atlanta. "The residential [market] is being reviewed by different legislatures on a state-by-state basis."
From a business standpoint, this stratification of the industry is causing some corporate holding companies to acquire or otherwise establish subsidiaries that allow them to address the distinct opportunities at each stage of the process. For example, PG&E Corp., based in San Francisco, provides energy services through its five affiliates: Pacific Gas and Electric Co., a gas and electric utility; PG&E Energy Services, a retail energy services company; PG&E Energy Trading, engaged in the wholesale purchase and resale of electricity and natural gas; PG&E Gas Transmission, a non-utility subsidiary which manages nearly 10,000 miles of gas pipelines; and U.S. Generating Co., an electricity producer.
Power producers can be found in nearly every state, but among the other big names producing and/or selling energy across regional boundaries are: Edison International, in Rosemead, Calif.; Enron Corp., of Houston; Sempra Energy, based in Los Angeles; and Southern Co., in Atlanta.
In addition to deregulation, another factor equally out of the industry's control impacts utilities: the weather and its influence over consumer demand. According to Hoover's Online, a business information Web site, last summer's heat wave in the Midwest forced small power traders on the wholesale market to default on promised electricity deliveries: "Their utility customers were shocked by spot market prices soaring up to $7,500 per megawatt hour." Earlier this year, a severe ice storm crippled Potomac Electric Power Co., in Washington, D.C., leaving more than 200,000 of its customers in darkness for days.
Amid this instability, companies are searching for ways to remain valuable to customers and operate efficiently. As a result, technological innovation has gained importance in the utilities industry. At Southern Co., computers are used in aspects as varied as customer service, automated plant operations, wholesale energy trading and an emerging area automated mapping. Ken Carroll, staffing analyst in Southern Co.'s Birmingham, Ala., office, explains: "If a customer needs a new line [installed], instead of pulling drawings, schematics can be accessed on site from a hand-held computer."
Southern Co. is also exploring environmental research, including electric vehicle development. The industry is "substantially more technologically oriented than it once was," Carroll says. "For the last 12 consecutive months, our most frequent hire has been engineers."
Even non-utility producers are finding a market for their technologies. Schlumberger RMS, in San Carlos, Calif., offers wireless meter-reading to retail customers. The company claims to be adding nearly 100,000 meters to its network each month.
In the already tight market for technical employees, utilities are elbowing their way into hiring. Southern Co. has been recruiting at schools like Georgia Tech, Auburn and Mississippi State, but has also expanded beyond its geographic area to knock on the doors of schools in Michigan, Illinois and North and South Carolina. "We need to attract top-notch employees," says Tyndall. "What we offer in terms of salary and benefits has to be competitive."
Brian Hertzog, manager of corporate communications at U.S. Generating Co. in Bethesda, Md., agrees that competition among all employers for graduates, especially those with computer science experience, is tough and getting tougher. "Our industry is like any other industry," he says. "We need good information systems people."
Both employers' needs and the opportunities they offer are varied. Southern Co.'s subsidiaries offering communications, computer services and plant design capabilities all have openings. "We use just about every discipline, but principally electrical, mechanical, industrial and computer engineering," says Carroll.
"They could work in customer operations, working with the distributing system of the company. They could work in the power plant, with the operation of the generators, which is mostly for mechanical engineers. We can fit just about any interest, from designing plants to working up to your knees in mud."
Eyeing opportunities overseas, power producers are also making the purchase of power plants both domestically and overseas a priority. "Right now there is a surge in new power plant development," comments Hertzog. "In anticipation of new markets opening up, companies are planning to build plants to service those markets."
"Through mergers and acquisitions, we are finding other utilities that fit our mix," adds Carroll. "As we acquire international plants, we are sending managers, marketing people and engineers there, but mostly senior people. They need people with experience."
Still, knowledge of global issues and business demands does set a student apart. "When we look at entry-level engineers, the primary things we are interested in, besides their technical background, are good communication skills, interpersonal skills and problem-solving skills," Carroll notes.
Part of the difficulty for these companies lies in convincing students that the utilities field is dynamic and exciting, when some may shrug it off for a more glamorous opportunity. "We are clearly dealing with cutting-edge technologies on a daily basis," Carroll concludes.
How can a student prepare him or herself for a career in this industry? Stay abreast of these changes by plugging into such sources as the Energy Information Administration, an independent research arm of the U.S. Department of Energy at www.eia.doe.gov. Also online is www.poweronline.com, an electronic magazine dedicated to the power industry and featuring news and analysis, chat forums for professionals and a career center that students intrigued by this fluid market might want to check out.