Why tax and finance transformation for utilities is now essential

Why utilities tax and finance functions face structural disruption

In prior years, many organizations treated disruption as episodic — a supply chain shock, a regulatory change, a temporary labor constraint. Today, P&U sector leaders describe something different. Volatility has become structural and its effects are compounding.

A significant majority of P&U US respondents say they are making moderate to significant changes to business operations in response to geopolitical pressures, with more than one-fifth anticipating significant change over the next two years. These shifts flow directly into tax and finance, where cross-border trade considerations, energy transition incentives, sustainability-related requirements are expanding both the scope and complexity of work. For many US utilities, this pressure is compounded by significant load growth forecasts, rising capital investment needs and a rapidly evolving legislative and regulatory landscape.

What makes this moment especially challenging is that expectations are rising even as organizations exercise greater capital discipline. Tax and finance teams are being asked to deliver faster insight, stronger risk management and greater transparency — often without additional budget or headcount. The traditional operating model is no longer designed for that reality.

Building an effective tax data and AI strategy

Cost pressure remains a defining feature of the environment, but the survey points to a more fundamental limitation. In 2025, the biggest barrier preventing tax and finance functions from delivering their purpose was the inability to execute a sustainable data, AI and technology strategy, overtaking budget constraints that ranked highest in the prior year.

This shift is significant. Many utilities recognize the strategic importance of technology, but struggle to translate intent into scalable capability. Data is often fragmented across systems, governance is uneven, and tax and finance teams are not consistently involved in enterprise data or platform decisions. As a result, even well-funded initiatives can stall before delivering meaningful impact.

Confidence levels reinforce this execution gap. Only about 10%–12% of P&U respondents describe themselves as very confident in their ability to execute tax data or technology strategies, despite widespread agreement that data and AI are critical priorities. In effect, aspiration is outpacing readiness — increasing the risk that transformation efforts remain localized rather than systemic.

Talent pressure is accelerating operating model decisions

Utilities are also confronting a talent challenge that cannot be solved through hiring alone. The survey highlights a clear shift in how leaders view the skills required for the future: Virtually all US respondents identify strategic thinking and problem-solving as critical capabilities, on par with tax technical knowledge.

At the same time, supply is tightening. More than half of respondents believe fewer accountants entering the profession will be detrimental to their organization, even as regulatory complexity continues to rise. These pressures are further intensified by evolving reporting expectations, which are increasing demands on already stretched teams.

Together, these dynamics are forcing leaders to make sharper distinctions about where scarce internal capability truly adds value. Routine, compliance-heavy and highly scalable activities are increasingly difficult to justify as in-house work when talent is constrained and expectations are rising.

Co-sourcing tax and finance to improve resilience

Against this backdrop, co-sourcing — particularly when paired with AI-enabled service delivery — is gaining momentum as a strategic response rather than a short-term cost lever.

P&U respondents report, on average, a 63% likelihood of co-sourcing select tax activities currently handled in-house, while 89% say working with AI-enabled tax and finance providers unlocks the greatest value. This reinforces the shift toward externally enabled, technology-driven operating models.

For many utilities, the appeal lies in flexibility and access: to scaled technology investment, specialized AI capabilities and global talent pools, without the fixed cost and execution risk of building everything internally. More importantly, co-sourcing enables internal teams to refocus on higher-value activities such as planning, risk management, stakeholder engagement and strategic decision support.