The Beginning Of The End For U.S. Utilities? | OilPrice.com
This is very interesting. The authors suggest that utility rates may rise 5% to 6%. This is in spite of low fuel cost. Essentially there has been a tremendous build up of capex coupled with little growth in demand for electricity, and these build in rate growth well in excess of inflation.
It's important to remember that fuel prices are not a big driver of the 5%÷ rate increases. This means that decreasing fuel prices cannot make utility power more affordable. It looks like residential solar may be down this year, but utilities will need to raise rates soon. This appears favorable for Solar Roofs and other residential solar in the coming years.
This is very interesting. The authors suggest that utility rates may rise 5% to 6%. This is in spite of low fuel cost. Essentially there has been a tremendous build up of capex coupled with little growth in demand for electricity, and these build in rate growth well in excess of inflation.
Based on projected business-as-usual hefty utility capital expenditure programs, it is not difficult to conclude that central station electricity costs in the U.S. will continue to rise faster than the rate of inflation (fuel costs aside). Given not just the introduction, but more importantly the acceptance of new distributed power generation technologies with declining cost structures, these price increases will make the franchise owning, incumbent utilities that continue to offer a commodity product at an ever increasing price less competitive in the future.
It's important to remember that fuel prices are not a big driver of the 5%÷ rate increases. This means that decreasing fuel prices cannot make utility power more affordable. It looks like residential solar may be down this year, but utilities will need to raise rates soon. This appears favorable for Solar Roofs and other residential solar in the coming years.