This piece, written by Energy Innovation’s Director of Strategy, Sonia Aggarwal, was originally posted in America’s Power Plan’s blog page.

Today, Peter Kind, author of last year’s Edison Electric Institute report, Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business, addressed an audience of attorneys and others brought together by Energy Biz in Kansas City.

Mr. Kind summarized the take-aways from last year’s report, which will be quite familiar to readers of America’s Power Plan. GDP is unlikely to grow as quickly as it has in the past, Americans are moving from the rustbelt to the sunbelt, and electricity demand growth has been slowing or even contracting amidst a backdrop of increased need for capital investment due to outdated infrastructure. At the same time, we have only seen a tiny fraction of the potential for new energy efficiency, distributed generation, and demand response technologies, which are also poised to erode utility market share.

Mr. Kind displayed this chart of declining electricity demand growth in the United States. The vertical axis represents average year-over-year demand growth as a percentage.

All of these pressures point to more competition in the electric sector. Utilities have several unique advantages to compete: access to low-cost capital, skills for building large-scale infrastructure projects, and experience interacting with a broad customer base. New entrants will have competing advantages: including the flexibility to offer innovative new technologies, products, and financing to their customers.

But the most interesting thing about Mr. Kind’s review of last year’s study is how his thinking has changed since he released the report. As a banker by trade, he wrote the report with the intention of calling out the need for regulatory changes to keep utilities’ balance sheets strong. Over the past year, though, he has come to realize the inevitability of technological change—neither large utilities nor state regulators can stop the wave of innovation in energy efficiency, demand response, and clean energy. It is time to look for bold solutions that will help us manage the transformation underway.

So, he calls utilities to embrace the unstoppable change and look for opportunities within it, saying “we need move to a new paradigm where we need to think about deploying efficiency solutions as a way to optimize the customer’s value being received, and as a result the utility being compensated fairly for the value it’s providing for those customers.”

We couldn’t agree more. For more ideas on how to make that model work for efficiency and other clean energy resources, see Rethinking Policy to Deliver a Clean Energy Future and Utility and Regulatory Models for the Modern Era.