Monday, January 18, 2010

Turmoil in Power Sector

Falling Electricity Demand Trips Up Utilities' Plans for Infrastructure Projects

by Rebecca Smith Jan 14, 2010 The Wall Street Journal

Falling U.S. electricity production in the past two years is frustrating the utility industry and shaking up timetables for some major infrastructure projects.

Electricity output decreased 3.7% last year, the steepest drop since 1938, according to federal statistics, following a nearly 1% decline in 2008. . .

The falling electricity demand and production are attributed to a weak economy, conservation efforts and, in 2009, a relatively mild summer in many parts of the country. . .

Government energy experts believe a strengthening economy will lift electricity production this year, but don't foresee a return to prerecession levels anytime soon. The Energy Information Administration expects industrial demand for electricity to increase 2.2% this year and 2.5% in 2011, which suggests a return to prerecession levels by 2013. . .

Mark Griffith, managing director of Black & Veatch, said utilities may be forced to defer infrastructure projects that weren't critically needed in light of the recent weak demand. . .