Why your utilities bill is backwards

March 21, 2012: 12:02 PM ET

It's hard to teach an old industry new tricks, but utilities in the U.S. need a change.

FORTUNE -- We'd all like a lower electric bill. To get one now, we have to use less energy -- only run the air conditioner at night, turn off the lights.

But ultimately, if we want to become more energy efficient overall, this model will not work. That's because many utilities companies base their businesses on the premise that people will continue to consume more.

This is especially problematic because the American utilities industry is approaching a breaking point. Not only is the payment model dated, but the infrastructure -- the towers and lines and pipes that keep the lights on in America -- is breaking down. "We really are operating these industries on the investments made by our grandparents," says Andy Roehr, a partner with PwC's utilities practice. According to the Energy Information Administration, 51% of all generating capacity in the United States was at least 30 years old at the end of 2010.

There's also pressure on the industry to become more efficient, both from customers and government mandates in certain states. And yet the industry faces a tremendous challenge. It's not as if the utilities industry can shut things down for a while to make major repairs. In fact, now more than ever, the economic health of the country depends on a steady stream of power. More

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