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CEO: Utilities must invest, adapt

“We have a significant challenge,” Steve Holliday told his audience.

Dina Rudick/Globe Staff

“We have a significant challenge,” Steve Holliday told his audience.

Utilities must adapt to a changing energy environment that will require greater reliance on renewable resources, increased investment in transmission and other infrastructure, and strategies to hold down costs for customers, National Grid chief executive Steve Holliday said Thursday.

“We have a significant challenge,” Holliday told executives gathered the Boston Harbor Hotel for the Boston College Chief Executives’ Club luncheon. “How can we deliver cleaner energy in the future, make sure it’s reliable, and at the same time afford it — things in conflict.”

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Holliday, who has led London-based National Grid since 2007, said the utility is trying to become more flexible in the way it delivers power to and interacts with its customers, for instance by testing smart meters and real-time pricing as a way to encourage energy users to conserve.

Holliday said that continued investment in energy infrastructure and new technologies is needed to ensure reliable, accessible power.

But, he added, those expenses must be balanced against rising energy costs, particularly in New England, which has some of the highest electricity rates in the country.

“Affordability has to be a key consideration,” he said, but “there is no doubt that if we don’t invest, reliability will suffer.”

Holliday’s comments about affordability drew some challenge from one audience member, who questioned National Grid’s agreement to buy power from the controversial offshore wind project, Cape Wind, at a starting price of 18.7 cents per kilowatt hour. That is roughly 11 cents more than the company’s current basic residential electric service rate of 7.25 cents.

Holliday responded that he believes the world must act now to find and encourage the development of new energy resources, which are likely to become cheaper the more they are used.

“We will never have enough wind onshore to provide the clean energy that we need,” he said. “Fossil fuels will run out. We can leave that problem to our kids and our grandkids or we can get on to start to incentivize the new technologies to come forward.”

Erin Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.
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