PCCA Journal|4
th
Quarter 2012
15
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address safety, integrity, and replacement of their assets,
the spending will far outpace the capacity of the industry to
undertake the work.
We expect natural gas prices to remain below $6 mcf for
the long-term, which will improve power generation de-
mand. Pipeline construction growth rates beyond 2015 will
be impacted by this demand factor. This late development
is primarily due to the large amount of natural gas power
plant capacity that was constructed in the late 1990s and
early 2000s that is already fed by existing pipelines. This fleet
boasts a large amount of unused capacity, and the flat electri-
cal demand in the U.S. driven by the weak economy has al-
lowed most utilities to avoid significant pipeline construction
to support increased gas-fired power generation. As the U.S.
economy recovers, electric demand will rise and the supply
and transmission issues that appeared in the late 2000s will
resurface, creating more gas demand and ultimately pipeline
construction demand.
Electric Transmission & Distribution
Spending growth in electric transmission and distribution
today is modest and driven by a combination of smart grid
efforts and electric reliability (Exhibit 3). Electric distribution
and transmission construction growth rates were both slowed
and in the case of distribution, shrank after the economic
and financial crisis in 2008 and the subsequent flattening
of power demand. This infrastructure, however, holds great
opportunity for upgrade through the application of commu-
nications technology, smart grid techniques and equipment,
and protection from storm damage. An acceleration of spend-
ing and growth in this sub-segment will occur once power
demand increases, housing starts return to normal, and faster
economic growth resumes. We anticipate the impact of this
spending growth in 2015 and beyond.
The Edison Electric Institute Annual Property & Plant
Capital Investment Survey demonstrates a peaking of electric
transmission spending in 2013 and very low growth rates of
distribution spending for the foreseeable future, excluding
storm-related damage. Our forecast expectations are similar,
with transmission spending peaking in 2012/2013 followed by
slowing growth that will again accelerate in growth in 2015
and beyond.
On the distribution front, the 2011 Irene and 2012 Sandy
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