Power utilities plan to spend $1.4 trillion on capital projects

Power utilities plan to spend $1.4 trillion over the next five years on capital projects, according to a new report by the energy nonprofit PowerLines. That’s a 21% increase over what utilities were planning a year ago and could drive up household utility bills (which have already been on the rise).

The power grid in the U.S. desperately needs updates, so that’s where a lot of that $1.4 trillion in planned capital spending is going, according to Charles Hua, founder and executive director of PowerLines.

“A significant amount of that will be necessary just to make sure that the lights stay on as our grid becomes increasingly unreliable and the infrastructure is getting old,” he said.

On top of that, many utilities are planning to add more power generation to keep up with growing electricity demand. Utilities can pass the costs of all these projects onto their customers, but first, they need permission from state regulators (often called public utility commissions).

“The decisions that get made by these state public utilities commissions over the next five years will make or break what actually happens to people's utility bills,” Hua said.

Those commissions will decide just how much of a return — beyond the cost of a project — companies can ask for.

“Utility companies are entitled to a fair return on their investments, and investors do get to make a profit on that, but it needs to be reasonable, and it needs to be balanced with affordability for customers,” said Annie Levenson-Falk, head of the Citizens Utility Board of Minnesota, which advocates for consumers before that state’s public utility commission.

In many cases, Levenson-Falk added that utilities can opt for less expensive ways to improve the grid, which can save ratepayers money.