Electric power sector making record investments in transmission and distribution
Electric utilities attribute the increased transmission investment to several key factors, including the completion of large capacity transmission projects across the country
Investor-owned electric utilities and stand-alone transmission companies invested a record $34.9 billion in transmission and distribution infrastructure in 2012 according to new survey results released today by the Edison Electric Institute (EEI).
The industry’s capital expenditures on transmission totaled $14.8 billion in 2012 — a 23.9-percent increase over the $11.9 billion (nominal $) that the industry invested in 2011. The increase represents the largest year-on-year-percentage increase in transmission investment since 2000, which saw a 39.9-percent jump from 1999 levels.
Electric utilities attribute the increased transmission investment to several key factors, including the completion of large capacity transmission projects across the country and interconnection of new sources of generation (including renewable energy resources) onto the grid.
Projected transmission investment continues to climb in 2013 and includes storm hardening investment post-Superstorm Sandy. Although projected investments show a slight decline after 2013, due in part to the cyclical nature of transmission investment, the projected level of annual transmission investment remains significantly higher than previous periods.
The EEI survey also found investment on electric distribution infrastructure was 4.7-percent more in 2012 than the $19.2 billion invested in 2011, for a total of $20.1 billion. The increased capital expenditures were largely linked to storm restoration efforts, as well as the development of automated meter infrastructure (AMI) and other smart grid activities related to the distribution system.
“The electric power industry’s record level of investment demonstrates the industry’s commitment to ensuring that all electricity customers benefit from a safe, reliable, resilient, and robust electric grid,” said EEI President Tom Kuhn. “It is important that the industry continues to be able to earn a return on equity that is commensurate with the level or risk associated with these significant investments.”
Additional highlights from the EEI survey include:
- After adjusting for increases in constructions costs, actual transmission expenditures increased 23.5-percent (2012 $) as compared to 2011 investment levels.
- The level of industry transmission investment in 2012 is 160.5-percent higher than investment made in 2000 (after adjusting for cost increases). Over this same time period, the industry has made a cumulative investment of $113.3 billion in transmission.
- Adjusting for a 3.2-percent increase in distribution-related construction costs in 2012, distribution investment increased 1.4-percent (2012 $) as compared to 2011 distribution investment levels.
- Since the beginning of 2000, the industry has invested $275 billion (2012 $) in the nation’s distribution system.