EE_MI_Notes from the Road_ Annual EEI Conference Highlights Strong Demand Runway for U.S. Utility_T&D Market

Summary of Key Points from the EEI Conference Notes Industry Overview - The notes focus on the U.S. electric utility and transmission & distribution (T&D) market, highlighting a multi-year favorable outlook for utility spending driven by increasing load growth, particularly from data centers [1][2][5]. Core Insights - Load Growth Expectations: Load growth is expected to accelerate, shifting from a historically flat outlook to low single-digit growth (LSD) and potentially higher rates by the end of the decade. Notable increases in load expectations have been reported by companies like AEP and Entergy [2][5]. - Capital Expenditure (Capex) Increases: Utilities are raising their capex plans significantly to accommodate the expected load growth. Companies like AEP, WEC, and Entergy have announced substantial increases in their capital plans, with AEP's capex plan rising to $54 billion for 2025-2029, a 25% increase from previous forecasts [2][9][12][24]. - Data Center Demand: The demand from data centers is a primary driver of load growth, with utilities negotiating terms to manage risks and maintain affordability for other customers. AEP anticipates significant commitments from data centers, contributing to a projected 3.5% normalized load growth [2][9][24]. Company-Specific Highlights - American Electric Power (AEP): AEP has introduced a new EPS growth CAGR of 6-8% for 2026-2029 and a capex plan of $54 billion, focusing on transmission and distribution improvements. The company expects substantial load growth driven by data centers [9][10]. - WEC Energy Group (WEC): WEC raised its 5-year capital plan to $27.6 billion, expecting 8.8% asset base growth through 2029. The plan includes significant investments in electric generation and distribution [12][13]. - Entergy Corp (ETR): Entergy raised its capital plan to $40 billion for 2024-2028, with a focus on renewables and T&D. The company anticipates robust industrial sales growth, particularly from large customers seeking clean energy solutions [24][25]. - First Energy (FE): FE's capex plan for 2024-2028 is now targeting approximately $26 billion, a 44% increase from the previous plan. The company expects data center demand to triple by 2030, with significant growth in load requests [28]. Other Important Considerations - Regulatory and Political Environment: Discussions around the potential impacts of elections on fossil vs. green investments were noted, with expectations of some trimming on aspects of the Inflation Reduction Act (IRA) but no full repeal anticipated [5][11]. - Supply Chain Dynamics: Inventory and supply chain dynamics appear stable, with some lingering inventory overhang in distribution hardware. However, end customer demand is growing, suggesting a potential pickup in growth as inventory issues are resolved [5][11]. - Affordability and Resource Adequacy: Concerns regarding affordability and resource adequacy were highlighted, particularly in relation to capacity market prices and the need for new builds to meet demand [5][11]. Conclusion The EEI conference underscored a strong demand outlook for the U.S. utility sector, driven by data center growth and significant capital investments by major utilities. The evolving regulatory landscape and supply chain stability will be critical factors to monitor as these trends develop.