NEW YORK--(BUSINESS WIRE)--Electricity sales growth for U.S. utilities will slow in 2012 with state and federal energy efficiency plans possibly exacerbating this trend, according to Fitch Ratings.
Reducing power consumption through efficiency, demand response, and conservation programs is a hallmark of most states' energy policies. Secular factors already present, such as the declining trend of electricity intensity within the U.S. economy reflecting the shift to a service economy, and low levels of new household formations will, combined, exacerbate the trend to reduced electricity sales growth.
Fitch believes electricity sales growth below consensus forecasts would pressure unit costs as environmental, growth capex and higher operating costs are spread out over few units of sales. Higher unit costs can lead to conservation and lower unit sales, perpetuating a downward spiral in electricity usage.
The credit implications of reduced electricity sales growth varies widely for individual utilities, given the variations in electricity consumption at the state level and different regulatory recovery mechanisms. Efficiency programs by large commercial users present the greatest risk of lost sales.
Fitch considers utilities in high-consumption, high-priced states as the most vulnerable and regulatory response will be a significant determinant of the ultimate effect.
The full report 'Power Down: Slow U.S. Electricity Sales Growth Ahead' is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
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