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.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld.
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189.
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.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Gavin Smith, IBISWorld 2, +1 (310) 866-5042, [email protected]
Share this article