China Energy News - China Energy Network | Recently, the power companies in the US public utilities sector have successively announced the 2018 annual report. Although the industry financial report data has not changed significantly, and the indicators have remained basically stable, but the executives of the US power companies They are not satisfied with this transcript – “Why is the power generation increased and the profits are reduced?”
Impediment to the development of the industry
According to the International Energy Agency, in 2018, the total power generation in the United States reached 4.18 trillion kWh, a year-on-year increase of 3.56%, the largest increase in power generation in the past seven years. In the case of good performance last year, US power companies are full of confidence in this year's performance.
However, reality and expectations are very different. Overall, the US power industry's revenue growth rate was around 1.5% in 2018, net income increased by about 2.9%, but net profit fell by about 2.2%.
In this regard, Oil Price Network wrote that the performance of US power companies is consistent with changes in US GDP. Although the total GDP of the United States has consistently ranked first in the world, the actual growth rate has been around 2.5%. From the data projection, in the case of US GDP growth rate of less than 3%, the growth rate of electricity sales in the United States will be less than 1.5%.
The oil price network believes that the US economic growth situation is not enough to drive the rise of the power industry. The good performance of the total power generation and its growth rate in one year alone cannot help the industry to detach from the long-term sluggish state.
Today, the US power industry is at the intersection of multiple economic transformations, which has led to an increase in the factors that hinder the development of electricity. For example, American lighting, industrial and other industries are vigorously promoting high-efficiency electricity consumption and reducing consumption intensity, which inhibits the growth of power consumption to a certain extent. At the same time, the United States gradually shifts from a manufacturing economy to a service-oriented economy. The demand is far less than the former.
Hot summer pushes up power demand
Economic growth and power consumption have a mutual impact, and in the case that the general trend is not very optimistic, the US power industry's revenue will still rise slightly in 2018. Why is this?
The oil price network said that changes in the weather have effectively boosted the growth of electricity demand. Due to the inability to adapt to climate warming and rising temperatures, the demand for air conditioners in the United States has soared, which has spurred the development of the air-conditioning industry and has also caused power companies to “stain”.
According to data from the Edison Electric Research Institute (EEI), a power industry research institute, the total sales of electricity has increased rapidly during the summer months when air conditioners are used frequently, which has also brought the industry a growth rate of 0.1%. "This seems to reflect the downturn in the US economy," EEI said, but for companies, growth is development.
The oil price network said that there is no more irony than "air-conditioning sales drive electricity sales." The United States has been vigorously developing new energy vehicles and is looking forward to stimulating power sales through the popularity of electric vehicles. The fact is that the public's demand for electricity stems from the effects of climate warming and rising temperatures.
Despite the increase in total power generation and sales in the United States in 2018, the overall business situation of the industry companies reflected in the annual report is not optimistic and continues to deteriorate. Earnings per share of most companies in the industry have declined, with an average decline of around 4%. At the same time, corporate cash flow deficits are gradually increasing. From 2009 to 2018, the industry cash flow deficit has quadrupled. The reduction of income tax rate, the reduction of cost and the continuous large-scale asset write-offs make the industry's non-recurring income a considerable amount, and the basic financial data is maintained at a certain level.
The oil price network believes that no matter how important and indispensable the power is, its essence is still a commodity, so the price/performance ratio is the focus of consumers' consideration. In order to improve the status quo, US power companies should stabilize electricity prices at a reasonable level, or develop new and cheaper suppliers.