Full Title: The Big Picture: 2023 Electric, Natural Gas, and Water Utilities Outlook
Author(s): Lillian Federico, Lisa Fontanella, Jim O’Reilly, Heike Doerr, Jason Lehmann, Adam Wilson, and Monica Hlinka
Publisher(s): S&P Global Market Intelligence
Publication Date: October 15, 2022
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The U.S. utility sector is undergoing significant changes impacting companies of varying sizes and service types. Investments in cleaner forms of energy production and the need to bolster infrastructure reliability is expected to drive utility capital spending in the next few years. Investors, regulators, and various other entities with diverse interests are critical in moving the industry forward.
In the electric power sector, more frequent extreme weather events are increasing stress on the grid and impacting system resilience. New renewable energy resources, especially those further away from load center, are further highlighting the urgent need for new transmission infrastructure to integrate these resources to the grid. Gas utilities have heeded calls to replace vulnerable parts of their distribution systems in light of several high-profile incidents. The highly fragmented water utility industry is dealing with its own unique set of infrastructure replacement needs, and this matter also features prominently in national discussions.
Federal legislation designed to support decarbonization initiatives is expected to attract substantial interest from utility investors in the coming years, but regulatory support, in the form of adequate returns on equity and ample cost recovery opportunities, is necessary to ensure that capital continues to flow to the sector.