Economic growth will lift electric power consumption and boost industry revenue.
New York, NY (PRWEB) May 26, 2014
The Electric Power Transmission industry stagnated over the past five years as electricity sales declined during the recession. The federal government and state public utility commissions (PUC) responded with generous subsidies and incentives, partly mitigating the revenue lost from lower consumption. “Federal government stimulus only offered short-term aid, though, and most has expired since 2009,” according to IBISWorld Industry Analyst David Yang. Electricity sales volume is expected to marginally increase an annualized 0.6% in the five years to 2014, while nominal retail electricity prices are estimated to increase at an average of 0.6% per year over the period. Stagnant price growth has been insufficient in keeping up with inflation. In the five years to 2014, IBISWorld expects revenue to decline an annualized 0.5% to $377.5 billion. In 2014, revenue is expected to fall 1.1% due to stagnant retail electricity sales growth.
Electricity consumption slowed during the recession, as nearly all downstream customers cut back expenditures. According to Federal Reserve estimates, manufacturers increasingly idled production facilities during the past five years, lowering industrial electricity consumption. Furthermore, the US Energy Information Administration estimates that households have increasingly adopted energy-efficient appliances, limiting household consumption. “In the commercial sector, many businesses closed, dragging down demand for power,” says Yang. In addition, electricity price growth has also slowed as transmission infrastructure became increasingly saturated over the past five years. Market saturation often occurs because PUCs generally grant higher rate increases to utilities that invest in transmission infrastructure. On the other hand, the adoption of smart grid technology has bolstered grid reliability and lowered operating costs, resulting in improved profit margins.
As the economy recovers, businesses and factories will resume operations and bolster electricity consumption. Additionally, PUCs are expected to grant rate increases for renewable energy transmission investments. Profitability is also projected to improve due to investments in lucrative renewable energy projects and improved operating efficiency.
For more information, visit IBISWorld’s Electric Power Transmission in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in the Electric Power Transmission industry transmit and distribute electricity from power generators to distribution centers, other electric utilities and final consumers. The transmission system includes lines and transformer stations, while the distribution system consists of lines, poles, meters and wiring that deliver the electricity to final consumers. This industry does not generate electricity.
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