Dave Brief:
- Among the challenges facing utilities, people are using less electricity per capita, a trend that may be growing, according to a report by Fitch Ratings. “Efficiency, driven by favorable economics and fostered by federal and state energy policies, will erode electricity sales for the foreseeable future,” the report said.
- Higher capital expenditures coupled with flat sales may push retail rates higher. “Earnings growth for the industry, based on higher capex in light of weak sales, is unsustainable and calls into question the industry’s current business model,” the report said.
- Independent power producers are getting hit, too. “Power prices are in turn expected to remain near current depressed levels, and forward curves portend only a slow recovery in wholesale power prices,” the report said.
Dive Insight:
The Fitch report outlines the dreaded utility death spiral, which Utility Dive covered in an article last week. Expect to hear more about these issues in the coming years.
