According to the GridStategies (leading power reliability consulting firm) November 2025 report, power demand forecasts were revised upward for the third consecutive year. Other strong growing regions include Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP). These issuances can be accretive when executed above book value and when regulators permit returns on the invested capital. The principal risk to accelerated rate base and EPS growth is execution, including planning, financing and building as well as continued regulatory support for timely cost recovery amid affordability concerns.
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Load growth is underpinned by 2% annual residential customer growth plus Port of Houston electrification, data centers, medical center expansion, the energy sectors. DOMINION ENERGY (D) D targets 5-7% EPS CAGR from 2025 EPS and is currently the largest data center provider in the US. Data centers are emerging as a major driver of U.S. electricity demand, but their rapid growth is increasingly constrained by local opposition tied to affordability, land use, and infrastructure scale. New load for industrial/manufacturing, oil & gas/mining, and other load types is also increasing compared to recent decades. Over the past three years, the 5-year forecast of utility peak load growth has increased by from 24 GW to 166 GW.
Many are upgrading legacy systems by investing in cloud-based ERP solutions and operational technologies, including geographic information systems (GIS) and automated metering infrastructure (AMI). “To succeed in the years ahead, utilities should balance the needs of meeting the growth in energy demand with continuing the energy transition path, hardening the grid to enhance reliability, managing the cost to the customer and transforming business models to be more customer-centric and digital-focused.” Still, a number of states will continue to pursue sustainability mandates and the jurisdictions in which utilities operate may be the key deciding factor in how aggressive they continue their energy transition.
Utilities are expected to integrate multi-year, multi-vendor supply agreements, embed grid-enhancing technologies, and use digital tools to track supplier and inventory risks in real time. These include tariffs on steel (including grain-oriented electrical steel) and aluminum, and certain copper products, in addition to expanding probes into solar, wind, and battery supply chains.47 The recent tightening of domestic content and sourcing requirements further adds complexity. Over the past few years, lead times for critical grid equipment such as transformers and switchgear have stretched to multiple years (figure 3), while equipment and project costs continue to rise. Additionally, utilities are exploring federated learning techniques to improve models across sites while keeping data local, offering a secure path to expand system intelligence.36 Together, this infrastructure can help balance resilience, compliance, and scalability for enterprise adoption. Some AI models are deployed on-premises to handle critical functions that cannot be moved outside of secure environments.
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Once viewed as inflexible mega-loads, hyperscalers are now potential operational partners.24 While the future of the power and utilities sector has never been less clear, it is certain that companies will need to change the way they do business today. Build a change-resilient organization by starting at the top with leaders who https://the-business-mag.net/what-are-the-emerging-markets-to-watch/ need the capability, influence and desire to lean into change as the new normal.
However, the magnitude of the year-over-year change in authorized ROEs is generally much smaller than interest rate changes. Authorized returns have generally followed the overall direction of interest rates, with a lag. In CA, utilities must file a full cost-of-capital (COC) application every three years with annual ROE adjustments if the Moody’s utility bond index changes by more than 100 basis points. Other late 2025 rate decisions, included LNT-Wisconsin P&L) – 9.8% (55%); AES-Dayton P&L (10.0% (53.9%); DUK-South Carolina – 9.99% (53%), EXC-NJ (Atlantic City Electric)-9.6% (50.2%). In recent years, utilities have needed to file more rate cases due to higher capital investment, higher interest rates and greater policy demands.
US Utilities – State of Power Demand: Full Steam Ahead
- Through AI, utilities can better understand load modeling capabilities and build them into planning-related activities and ongoing grid management for resilience and reliability.
- Further, compared with other industries, the P&U sector is much more fragmented, partially because of its unique and heavily regulated structure, which could drive broader consolidation within the next six months.
- Capital spending for a peer group of 44 North American electric utilities increased 15% nominally in the first three quarters of 2025 compared with the same period in 2024.
- Failure to maintain an appropriate balance could have negative consequences in attracting and retaining talent, as 56% of employees in our survey say there’s too much change happening at once.
- This all should be accomplished while managing changes in renewables subsidies and the role of sustainable energy in our economy.
Even with the desire to “reawaken” nuclear as a key part of the future power generation mix, moving away from traditional energy sources will not be a seamless transition. The Department of Energy has made clear it wants to include the production of nuclear energy, saying it wants to triple nuclear capacity — adding 200 GW — to meet net-zero emissions goals by 2050. One example of this includes a recently announced partnership between a mega-technology firm https://scivast.com/articles/analysis-energy-storage-systems/ and a nuclear power company to power the tech company’s data centers using small modular reactors (SMRs).
FULL STEAM AHEAD: ELECTRIC DEMAND GROWTH FASTER THAN INFRASTRUCTURE BUILD
In the May STEO, we forecast natural gas consumed by the U.S. electric power sector will average 43.7 billion cubic feet per day (Bcf/d) during the summer (June–September), the same as in the summer of 2025, and 4% above the five-year summer average (2021–2025). We forecast natural gas consumption by the U.S. electric power sector this summer will remain near recent highs and set a record next summer in our May Short-Term Energy Outlook (STEO). The SoCal Border Average represents a daily natural gas price index tracking spot prices at key delivery points into the Southern California Gas system. Underground natural gas storage provides a source of energy when demand increases, balancing U.S. energy needs.
Utilities must put people and the planet before profits
While new large-scale reactors are unlikely before 2035, momentum is building through restarts, life extensions, and small modular reactors (SMRs). In December 2025, GE Vernova, a major manufacturer of power generation equipment, expects to secure contracts for 80 gigawatts of combined-cycle gas turbines by the end of 2025 compared to 14 GW in 2024. At its December 2025 Analyst Day, NEE outlined a broader long-term development opportunity of ~285 GW, spanning renewables, storage, gas, and nuclear, highlighting “bring-your-own-generation” solutions for hyperscalers managing affordability.
- However, the magnitude of the year-over-year change in authorized ROEs is generally much smaller than interest rate changes.
- That investment comes, however, with increased physical and IT infrastructure needs, different compliance standards and greater complexity to managing costs.
- However, the customer experience for large commercial and industrial customers looking to grow or build capabilities in new geographies is often slow and challenging.
- The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets.
- In CA, utilities must file a full cost-of-capital (COC) application every three years with annual ROE adjustments if the Moody’s utility bond index changes by more than 100 basis points.
Smarter systems: Integrate analytics and AI to optimize efficiency
The wind farm, located in New Mexico, has a total net summer generating capacity of 3,650 megawatts (MW) and is composed of 916 wind turbines. Gasoline production averaged 9.5 million b/d, and distillate production increased to 5.2 million b/d. The trend is particularly notable in the early spring (March and April), when solar generation has an outsized impact because demand is relatively low and conditions for solar generation are favorable. The Research Analysts’ views are subject to change at any time based on market and other conditions. We believe that the combination of strong utility fundamentals, and the potential for accelerated electric demand bode well for the relative performance of utilities. In addition, current utility dividend returns become less compelling when returns on other investments increase, including Treasury yields.
A key source of affordability anxiety stems from deregulated power markets—particularly PJM, a 13‑state region that includes New Jersey and Virginia. Had been viewed as a stable, regulated way to participate in the AI‑driven data‑center build‑out, which requires massive incremental power demand and supports sustained rate‑base expansion. Utilities We believe the pause and reassessment makes sense given the tremendous amounts of capital that the hyperscalers are investing and the potential for winners and losers in the AI space and data-center market.