Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

October 6, 2012

Power demand shrinks, eroding utilities' profits

The U.S. is seeing a 'quiet revolution' as efficient appliances and mindful energy use catch on.

Bloomberg News

CHICAGO - Robert Rhea logged on to his iPad in Cape Cod, Mass., one day in August to turn off the air conditioning in his Dallas home ahead of cooler Texas weather.

Rhea, who was attending a wedding and tracked his daily power usage on an iPhone app supplied by TXU Energy, estimates the remote tweaking saved him $175 on his electricity bill that month. He controls his home temperature through a wireless thermostat TXU gave him in exchange for allowing the utility to shut off his air conditioning during periods of high demand.

The 57-year-old owner of a tile refinishing business is among a new breed of conservationists that analysts say is curtailing sales of electricity and driving an unprecedented shift in the $374 billion U.S. power industry. After homes and businesses stocked up on energy-saving gadgets and appliances, power use per unit of economic growth fell to a record in 2011, according to the Energy Department.

"There is a quiet revolution in energy efficiency going on in our country," said Howard Learner, executive director of the Environmental Law and Policy Center, Chicago-based advocates of clean energy.

The U.S. is a proving ground for nations such as Japan, Britain, Germany and Canada that also have started offering more efficient appliances to consumers and testing "smart" technology that powers down homes when prices surge.

The result: demand for electricity is shrinking even as economies grow, an effect that's starting to erode sales and profit at utilities from New England to Oregon. They include OGE Energy Corp. and Teco Energy Inc., both of which have under-performed the 10 percent gain this year in the Russell 1000 Utilities index.

Electricity use in the U.S. declined 2 percent this year through Sept. 22, and was down 3 percent from a year earlier as consumers buy light bulbs that burn 25 percent fewer watts and install technology that turns off appliances when the delivery grid is strained. The industry produced $374 billion in revenue in 2011, the Edison Electric Institute said.

Power and coal consumption dropped last year to 2,790 British thermal units per real dollar of U.S. gross domestic product, a 32 percent drop from 1981 levels and a record low for data collected since 1973, the Energy Department said on its website.

Learner credits a 20-year push by the federal government to promote energy-saving appliances. Consumers bought 280 million such products in 2011, cutting their utility bills by $23 billion, the Environmental Protection Agency said on its website.

FirstEnergy Corp. Chief Executive Officer Anthony Alexander said the Midwestern markets where his power company operates have lost "about five years of growth" and that margins were being squeezed by poor demand and an oversupply of electricity generation.

"We would have thought that by now we would have seen a far more robust growth in the industrial, commercial and residential sectors than we're seeing," Alexander said at a Sept. 5 investor conference. "In fact, we are seeing flat to negative residential, flat to very sluggish commercial and spotty industrial."

Utilities are expected to invest $12.4 billion in smart meters and updated electricity grids through 2015, amplifying the trend, Theodore Hesser, an analyst for Bloomberg New Energy Finance, said in a telephone interview.

U.S. demand for power is expected to grow by about 1.1 percent through 2030, well below the 1.7 percent annual growth rate that the industry saw from 1990 through 2011, consulting firm Wood Mackenzie said in a July 2012 report.

Angie Storozynski, a New York City-based analyst for Macquarie Capital USA Inc., predicted long-term load growth will be even lower, about 0.6 percent, in a Sept. 11 note to clients.

(Continued on page 2)

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