December 3, 2022


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Much of U.S. at potential risk of tight power supply this winter – report (NYSEARCA:XLU)

Power lines and sunset landscape

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Large portions of North America is at risk of “insufficient electricity supplies during peak winter conditions,” potentially causing blackouts and other energy emergencies, the North American Electric Reliability Corporation reported in its winter reliability assessment issued Thursday.

The U.S. electric grids at the highest risk of supply shortfalls are in Texas, the central system stretching from the Great Lakes to Louisiana, and New England, according to NERC, the organization responsible for the reliability of U.S. power grids.

In Texas, NERC projected power demand will rise by more than 7% from last winter, causing lower reserve margins, with generators and fuel supplies still threatened by extreme cold such as the February 2021 Texas freeze.

In the Midcontinent Independent System Operator territory in the Midwest, NERC said reserve margins have fallen 5% since last winter as retired generation exceeds replacement capacity.

In New England, NERC warned the amount of oil stored at power generators was only ~40% of capacity.

But the report overall is slightly less dire than a year ago, as the outlook for winter hydropower generation in the West has improved and the Southwest Power Pool has added new gas and wind generation.

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The utility sector’s recent dividend payout of $0.501/share represents only a 0.4% rise Y/Y, signaling more profitability pressure ahead, Envision Research writes in an analysis published on Seeking Alpha.