Electric Power Transmission, Distribution & Marketing
Companies in this industry own and operate high-voltage transmission lines and retail distribution systems, as well as intermediaries like energy dealers and brokers. Major companies include American Electric Power, Duke Energy, and Exelon (all based in the US); State Grid and China Southern Power Grid (both headquartered in China); EON (Germany); SSE (Scotland); TEPCO (Japan); and Federal Grid (Russia).
The global electricity industry produces about 25 trillion kilowatt hours (KWh) of electricity annually. The leading countries in electricity generation, consumption, and installed capacity are China, the US, India, Russia, Japan, Canada, and Germany. Growth in the global electricity market will be primarily in African countries and India, where large portions of the population still lack access to electricity.
The US electric power transmission and distribution industry includes about 7,800 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $320 billion. Companies that produce electricity are covered in the Electric Power Generation industry profile.
While deregulation has altered power markets in many nations, electric utilities often continue to operate as unofficial monopolies in a given service territory. Demand for electricity is driven by industrial and commercial activity and by population growth. The profitability of individual companies depends on government regulations and the efficiency of their operations. Large companies have economies of scale in purchasing power; small companies can compete effectively by specializing in geographic regions. The US industry is highly concentrated: the 50 largest companies account for about 80% of revenue.
In the US, the traditional electricity industry consisted of investor-owned utilities, municipal utilities, cooperatives, and government entities that owned the generation, transmission, and retail distribution facilities within a limited area and served all customers within that area as tightly regulated "natural monopolies." Though "natural monopolies" still exist, the electric energy industry underwent a restructuring driven by changes in federal and state laws in the 1990s. In restructured (or deregulated) markets, generation, transmission, and distribution operations are carried out by separate companies, and the owners of local distribution lines make their lines available to competitors. The intended purpose of moving toward a less regulated electricity market was to decrease the cost of electricity by fostering competition among producers. One practical effect was the divestment of generation facilities by many investor-owned utilities.
Despite the popularity of restructuring activities initially, only about 15 states have deregulated their electricity industries. Several other states, including California, launched restructuring initiatives before suspending them, in part because of concerns that restructuring caused electricity rates to rise. Many local electricity distributors are still owned by utility holding companies that also own power generation facilities, wholesale transmission lines, and wholesale power trading companies.
Products, Operations & Technology
The primary operations of retail electricity distributors include acquiring wholesale power (often under long-term supply contracts), maintaining and extending
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms