Utilities Increase Spending On Distribution Systems
The need to support the nation’s growing demand for electricity and its increasing appetite for power generated from renewable sources has brought its aging transmission and distribution infrastructure into sharp relief.
According to data from the U.S. Energy Information Administration (EIA), major U.S. utilities are investing heavily in their distribution systems. The EIA reports that U.S. electric utility spending on electricity distribution systems has risen 54 percent over the past two decades, from $31 billion to $51 billion annually. Major U.S. electric utilities represent about 70 percent of the U.S. electric load.
The EIA explains that several factors affect electric distribution spending, including the number of customers served, the amount of electricity sold, the number of miles of electric distribution wire installed, and the maximum amount of load on the lines at one time.
Capital investment accounts for the largest share of distribution costs as utilities work to upgrade aging equipment. The EIA cites a U.S. Department of Energy report, which indicates roughly two-thirds of power transformers, circuit breakers and transmission lines are at least 25 to 30 years old. Upgrades are also being made to poles, wires and transformers to better withstand extreme weather events, to perform better during system emergencies, and to accommodate renewable power.
Over the past decade, investment in overhead poles, wires, devices and fixtures (e.g., sensors, relays, and circuits) has risen by 69 percent, and spending on substation transformers and other station equipment has increased by 35 percent. Investment in customer meters also has more than doubled over the past decade as utilities have upgraded customer meters to smart meters.
Not surprisingly, the EIA notes that the largest spending increases have occurred in the older, more populated systems. This includes the Northeast Power Coordinating Council in New York City and Boston; Reliability First in Chicago, Detroit, Philadelphia, and Baltimore-Washington, D.C.; and the Western Electricity Coordinating Council in Los Angeles and San Francisco.