Power Biz 101

Electric Companies Are Operating In A Rising Cost Environment.
The electric power industry is among the country‚Äôs most capital-intensive sectors, with many of its costs stemming directly from investments in and maintenance of the power plants, transmission and distribution lines, equipment, and structures that are used to deliver electricity. Electric companies typically cannot recover their costs when they are incurred; instead, they are required by regulatory authorities to spread out their costs to customers over the physical life of the investment—sometimes as long as 30 years—under the assumption that there will be a stable customer base.

Today, electric companies are facing steadily increasing costs to generate and deliver electricity to American homes, businesses, and industries. While electric companies make continuous efficiency improvements and are working closely with regulators to contain costs and to keep electricity prices as low as possible, rising electricity costs are becoming inevitable throughout the United States. And yet, electricity remains one of the true bargains among crucial U.S. commodities.

Material in this section from Key Facts About The Electric Power Industry, courtesy of Edison Electric Institute, 701 Pennsylvania Avenue, N.W., Washington, D.C. 20004-2696, www.eei.org.