EIA Says Annual Utility Spending is on the Rise

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Annual utility spending in the electric sector has increased 12% over the last 20 years.  Total spending was $287 billion in 2003 compared to $320 billion in 2023 (adjusted for inflation).  The driving force behind the increase has been capital investments for infrastructure improvements to distribution and transmission systems.

Closer Look into Annual Utility Spending Trends

According to the Energy Information Administration (EIA), the amount electric utilities have spent on capital infrastructure has more than doubled over the past 20 years.  This is primarily attributable to:

• Storm and fire hardening of old generation and distribution infrastructure.
• Increased installations of, initially, natural gas power plants, followed by clean energy infrastructure like wind, solar and battery storage.
• Connecting more and more renewable energy sources to the grid.
• Deployment of smart technology like sensors, smart meters, and automated controls.

As previously noted, distribution spending has driven much of the increase, increasing 160% over the past 20 years to $31.4 billion.  About 20% of this increase occurred between 2022 and 2023 as utilities replaced and upgraded infrastructure at an increased rate. The main categories of distribution investment highlighted by the EIA include:

• Capital spending on overhead lines, poles, and towers ($17.4 billion spent in 2023, a 220% increase from 2003).
• Undergrounding lines ($11.8 billion spent in 2023, a greater than 100% increase since 2003).
• Capital spending line transformers ($7.5 billion spent in 2023, a 23% increase over 2022).
• Upgrades to substation equipment ($6.1 billion spent in 2023, a 184% increase from 2003)

Over the same period of time, transmission spending also increased substantially, tripling over the past 20 years to nearly $28 billion.  Conversely, spending on the production of electricity actually dropped 24% over the past 20 years due to lower fuel costs as well as the retirement of higher-maintenance fossil fuel plants – however, capital spending on production infrastructure increased by 23% (to $4.7 billion) from 2022 to 2023.

Click above for more details.  All in all, the fact that annual utility spending is on the rise definitely bodes well for emergency preparedness.