Electric Power Generation & Distribution
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,900 electric power generation and distribution companies in the US produce and deliver electricity to residential customers, commercial businesses, and industrial operations. The industry consists of publicly-owned utilities, electric co-operatives, investor-owned utilities, and power marketers. Operations are either fully or partially regulated, depending on the State they operate in.
Changes in Environmental Laws and Regulations
Environmental laws and regulations are changing constantly and can have large impacts on electric utilities.
Shift to Natural Gas Generation
Low natural gas prices and restrictions on coal and nuclear plants are causing a shift to natural gas for new generating capacity.
Industry size & Structure
A typical electric power company operates from multiple locations and has revenues of about $243 million per year.
- There are 1,900 firms providing electric power utility services in the US, employing 380,700 workers, and generating annual revenue of $473 billion.
- 59% are publicly owned utilities, 25.2% are cooperatives, 5.2% are investor-owned utilities and 9.3% are power marketers.
- Public utilities serve 14.5% of US customers, cooperatives serve 13.2%, investor-owned utilities serve 67% and non-utilities and power marketers serve 4.8%.
- 45% of establishments have fewer than 20 employees, and 20% of firms are large with over 100 employees each.
- Large electric power utilities include: Exelon Corp., Southern Co., First Energy, Puerto Rico Electric Power Authority (PREPA), PSEG Long Island, Los Angeles Department of Water and Power (LADWP), Withlacoochee River Electric Cooperative, Cobb Electric Member Corporation and Middle Tennessee EMC.
- Entry into the business as a for-profit enterprise in the distribution business is difficult as most population centers are in franchised territories as designated by the state public utility commission. Entry into the generating business as an independent power producer (IPP) has a lower barrier, requiring only permits and capital for construction and certification by the ISO.
Industry Forecast
Electric Power Generation & Distribution Industry Growth
Coronavirus Update
Apr 11, 2022 - Russian Invasion of Ukraine Roils Global Energy Markets
- Russia’s invasion of Ukraine sent shock waves through global energy markets at a time when energy prices were already rising. The US has banned all Russian oil, gas, and coal imports. While the European Union (EU) has banned imports of Russian coal, it will take time for the EU to wean itself off Russian oil and gas. The disruption to global energy markets is expected to raise electricity prices in Europe and the US. The US Energy Information Administration (EIA) expects US electricity prices to rise by 3.8% in 2022 after increasing by 4.25% in 2021.
- During the pandemic, investments in oil and gas exploration and production (E&P) declined amid weak demand. As global oil and gas consumption has gradually increased, E&P investments have not kept pace. Oil and gas majors have been under pressure from shareholders to keep a lid on investments. While Russia’s attack on Ukraine is expected to spur firms to increase investments in oil and gas production, bringing more production online will take time.
- Many utilities are trying to work with customers to resolve unpaid bills. A common approach is repayment plans in which the amount owed is broken down into chunks that are tacked on to monthly bills going forward. Repayments can be set up over five years for those making less than 300% of poverty guidelines and one year for everyone else. Utility customer service representatives can also check to see if customers qualify for programs that will lower or even erase debt.
- US electricity consumption increased in 2021 compared to 2020 as more of the economy reopened. The rise in electricity use increased demand for natural gas, which also drove up gas prices. As gas prices rose, some electricity producers switched to coal. In 2021, coal accounted for 23% of US power generation compared to 20% in 2020. Natural gas’ share of power production fell to 37% in 2021 compared to 40% in 2020. Coal use in 2021 was also driven by global supply chain disruptions that slowed the progress of bringing more renewable energy capacity online. Some industry watchers expect the war in Ukraine could be similarly disruptive in 2022 and create a greater reliance on coal for US energy generation.
- The war in Ukraine has worsened global supply chain snarls and driven raw materials prices higher, which is creating additional headaches for renewable energy projects, according to The Wall Street Journal. Inflationary pressures were pushing renewables’ raw materials and transportation costs higher before the invasion, and the war is making matters worse. About 13% of US utility-scale solar projects that were planned to be completed in 2022 have either been delayed by a year or canceled, according to a report by Wood Mackenzie and the Solar Energy Industries Association. However, industry watchers expect cost and supply chain issues are short- to mid-term challenges. Longer-term, the drive to reduce dependence on Russian energy and carbon emission reduction goals will increase demand for renewables.
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