Power and Utilities Industry Outlook 2017

Opportunities amidst transformation

How will the new administration impact the power and utilities industry? What are the trends that can help utility companies manage costs? Discover the answers to these questions, and more, in Deloitte’s 2017 Power and Utilities Industry Outlook. By reading this take from Scott Smith, US Power & Utilities leader, Deloitte LLP, you can learn ways to preserve your bottom line in the midst of transformation.

Power and utilities overview: The impact of politics

The incoming US Administration and Congress will likely bring change to the power and utilities sector, though it may be more limited than some expect. And it won’t change the fact the utility industry is still in a period of transformation. Rising costs have become the norm for utility planners—and that’s likely to persist as long as requirements and expectations from regulators, customers, and other stakeholders continue to mount. But new regulatory structures and business models are emerging that may provide additional tools to help manage these costs.

A trend that’s likely to continue is the overall utility sector transformation. So far it’s been characterized by steeply rising costs, but emerging trends may help utilities manage some of these costs. Electric and gas utility capital spending for the largest US investor-owned utilities (IOUs) hit an estimated record-breaking $117 billion in 2016. The biggest ticket items were:

  • Upgrading aging infrastructure
  • Grid modernization 
  • Generation/environmental/renewables
  • Natural gas pipelines, storage, and distribution

Download the outlook for further insight on how the new administration will impact the power and utilities sector.

Trends that can help manage costs

As pressure mounts for the power and utilities sector, two trends seem to be emerging that may help utilities manage some of the risks of rising costs:

  1. Risk-based ratemaking: Utilities, regulators, and other stakeholders are beginning to collaborate to address risk and uncertainty as part of the rate case process. Ratemaking decisions have traditionally been based on least cost, with limited consideration of risk. But stakeholders in California and other states, sometimes in the wake of tragic accidents, are increasingly concluding there may be more effective ways to ensure the safety, reliability, and affordability of energy supplies. As a result, the rate-making process seems to be evolving to increasingly base decisions on the underlying risk of an operational item, which, in turn, enables better decision-making.
  2. Growth of behind-the-meter resources: As electricity customers rapidly add new distributed energy resources, from solar photovoltaics (PV) to energy storage to electric vehicles, utilities see opportunities to tap into these resources to balance the grid, improve efficiency, boost reliability and resilience, and defer or avoid some of the cost of investment in new generation, transmission and distribution assets.

Download the outlook to learn more about the innovative new trends that can help utilities manage and spread costs.

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2017 regulatory trends in energy

The 2016 election results may, over time, reshape the energy industry’s regulatory landscape. Some key regulatory areas, such as derivatives oversight, renewable energy tax credits, and environmental protection, face uncertainty. And time will tell how these events may impact the industry. The issues included in this year’s report provide a starting point for an important dialogue about future regulatory challenges and opportunities.

Access the full report for a deeper look at these trends.

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Energy Regulatory Outlook

Look again

In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.

Discover more Industry Outlooks.

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