Associated Press
An unexpected drop in U.S. electricity consumption has utility companies worried that the trend isn’t a byproduct of the economic downturn, and could reflect a permanent shift in consumption that will require sweeping change in their industry.
Numbers are trickling in from several large utilities that show shrinking power use by households and businesses in pockets across the country. Utilities have long counted on sales growth of 1 percent to 2 percent annually in the U.S., and they created complex operating and expansion plans to meet the needs of a growing population.
"We’re in a period where growth is going to be challenged," says Jim Rogers, chief executive of Duke Energy Corp. in Charlotte, N.C.
The data are early and incomplete, but if the trend persists, it could ripple through companies’ earnings and compel major changes in the way utilities run their businesses. Utilities are expected to invest $1.5 trillion to $2 trillion by 2030 to modernize their electric systems and meet future needs, according to an industry-funded study by the Brattle Group. However, if electricity demand is flat or even declining, utilities must either make significant adjustments to their investment plans or run the risk of building too much capacity. That could end up burdening customers and shareholders with needless expenses.
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To be sure, electricity use fluctuates with the economy and population trends. But what has executives stumped is that recent shifts appear larger than others seen previously, and they can’t easily be explained by weather fluctuations. They have also penetrated the most stable group of consumers — households.
Dick Kelly, chief executive of Xcel Energy Inc., Minneapolis, says his company, which has utilities in Colorado and Minnesota, saw home-energy use drop 3 percent in the period from August through September, "the first time in 40 years I’ve seen a decline in sales" to homes. He doesn’t think foreclosures are responsible for the trend.
