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31 July 2006, The Financial Times

Elemental lessons in facing change

Mike Scott reports on the opportunities in the utilities sector where prices and environmental concerns will force new thinking. Utilities are at the heart of the economy, supplying some of the most basic requirements of society, such as heat, water and power. As a result, many of the risks and challenges they face are fundamental as well.

Climate change is a crucial area of concern, according to James Cameron, Vice Chairman of Climate Change Capital. "Utilities have to cope with climate change and understand its implications. They are going to be directly involved in the response to it, so they need to know what they are doing."

The challenges include how to operate in a world where consumers will be encouraged to consume less of its fossil fuel product. A big question is whether the energy market can be changed to reward efficiency rather than volume in the provision of energy services. Companies could provide energy for a fixed price and then install energy-saving measures to help you reduce your consumption.

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