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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Mar 23, 2023 - EPA Rule Tightens Nitrogen Oxides Emissions
                                • In mid-March, the Environmental Protection Agency (EPA) released its Good Neighbor rule, which will impose more stringent regulation of nitrogen oxides (NOx) emissions by power plant owners in 23 states, according to Utility Dive. Power plants that don’t have NOx reduction equipment will need to add it and run it continuously during ozone seasons to protect communities downwind. To ensure the ruling doesn’t negatively impact grid reliability, the new rules will be phased in gradually, resulting in 14 gigawatts (GW) of coal retirements by 2030, which represents a 13% reduction in national coal capacity. The rule will also reduce emissions of other pollutants besides NOx, including sulfur dioxide, carbon dioxide, and fine particles.
                                • While the Inflation Reduction Act (IRA) is expected to unleash a wave of domestic solar manufacturing capacity investment that many never thought possible, full implementation will take time, according to Utility Dive. Since the IRA was signed, 18 new solar manufacturing projects have been announced, according to the Department of Energy’s Solar Energy Technologies Office (SETO). However, some manufacturers and financiers are waiting for the IRS to finalize implementation details about the law’s tax credits, such as the percentage of domestic content required for a product to qualify for the full credit. Striking the right balance will be critical, according to solar trade group Solar Energy Manufacturing for America Coalition (SEMA). If the IRS standard for US content is too stringent, it could stifle investment. However, an ambitious domestic content requirement could spur development of production capacity for components further up the solar supply chain.
                                • The nascent US offshore wind industry does not yet have enough skilled workers in the pipeline to meet the Biden administration’s goal of having 30 gigawatts of offshore wind generation capacity installed by 2030, according to recent remarks by Jeremy Stefek, a researcher at the Department of Energy’s National Renewable Energy Laboratory (NREL). The NREL suggests that training and apprenticeship programs could help bring more people into the industry, but building the programs and training the workers would take several years. To meet near-term labor needs, the NREL said offshore wind projects could recruit workers in adjacent industries, such as offshore oil and gas.
                                • US efforts to foster a domestic solar equipment supply chain could run into trouble from a proposed plan by China to limit exports of some solar equipment, according to The Wall Street Journal. China may add the technology to make ingots and wafers used in solar panels to a group of products that are subject to export restrictions. China presently controls nearly all of the global manufacturing capacity for solar ingot and wafer production and a significant portion of the market for the equipment used to manufacture them. China’s market control is particularly tight for the large panels holding a dominant market share. If the controls go into effect, Chinese solar manufacturers would have to secure an export license from the local provisional government. China has not indicated when it will make a final decision on the restrictions.
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