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Electricity distribution investments rose over the past two decades in U.S.

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Posted November 11, 2014

Investment by U.S. investor-owned utilities in the electricity distribution system has increased over the past two decades. While down from a peak of $20 billion in 2012, 2013 levels remain higher than spending in the 1990s and early 2000s. Increased investment in the electricity distribution system has occurred even as U.S. electricity sales have decreased.

Source: U.S. Energy Information Administration, from the Federal Energy Regulatory Commission

Source: U.S. Energy Information Administration, from the Federal Energy Regulatory Commission

Electricity distribution systems differ from transmission systems, which have also experienced increased investment over the past two decades. Transmission systems consist of the infrastructure necessary to deliver electricity from power plants to substations located near demand centers. Components of the transmission system are rated for higher voltages than the distribution system that delivers electricity to end users. The electricity distribution system consists of lines, substations, and transformers that lower the voltage to levels required for customers such as homes and businesses.

Much of the spending on distribution dealt with hardening the system and making it more resilient in response to an increase in weather-related outages during the past decade. Major spending areas included:

  • Burying power lines that affect vital services and large numbers of customers
  • Replacing vulnerable equipment with better designed, technologically advanced equipment, including poles designed to withstand high winds, submersible components, and elevated substations in flood-prone areas
  • Installing smart grid technologies like automated circuit breakers and feeder switches, as well as mapping systems that immediately stop problems from spreading and show utilities where problems are located
  • Increasing standby equipment (i.e., trucks, fuel, flashlights, communications systems) and restoration materials (i.e., poles, wires, transformers)

Not all distribution system spending has focused specifically on protecting the system. Burying power lines is also done for aesthetic reasons. Smart grid technologies such as advanced meters and communication systems allow customers to better respond to price increases and system events by modifying their electric use. Advanced voltage-regulating components allow communities to use more renewable technologies for distributed generation.

Although most distribution lines are still overhead, U.S. spending on underground distribution lines equaled spending on overhead lines from 1998 through 2008 when underground facilities were installed in nearly all new residential and commercial developments and critical overhead lines vulnerable to storm damage were moved underground. Florida, the Northeast, and the West spent more money on underground infrastructure than on any other part of the distribution system over this period. About 39% of Americans are served by underground wires, with greater percentages in the South and West.

Between 2009 and 2012, spending on smart metering infrastructure increased as a result of the $7.9 billion in American Recovery and Reinvestment Act (2009) spending and matching funds. In Texas and Florida, spending on meters surpassed all other distribution system spending during this time, while in western regions, spending on meters increased from 12% prior to 2009 to 26% in 2010 as a result of the legislation.

Source: EIA

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