PCCA Journal 4th Quarter 2013 - page 14

PCCA Journal|4
th
Quarter 2013
14
authorized spending its $100
million contingency fund within
seven days of the flooding, as did
several local utilities. Northern
Colorado must overcome the
challenge of scarcity, be it money,
labor, equipment, or other factors
in order to rebuild.
5
These events serve as an ex-
ample of the situation facing the
utility industry. There is a flood
of work to be completed while
resources of all types are scarce.
Said another way, there is “Water,
water, everywhere, Nor any
drop to drink.” The 2014 Utility
Outlook investigates the spend-
ing, scarcity, and opportunity
in electric and gas transmission and distribution and com-
munication sectors. In Exhibit 1, forecasted growth for these
segments is flat or slightly falling in 2014 with growth beyond
that point. Picking the right geographies, market segments,
customers, and services will prove critical. Successful con-
tractors will recognize that this situation demands innovative
solutions to thrive in an environment of scarcity and they
will “Rocket to Success.”
Transmission &
Distribution - Electric and Gas
Spending Forecast
The transmission & distribution (T&D) segment in total
weathered the financial
crisis relatively unscathed
supported by strong spend-
ing on gas and liquid pipe-
lines. The electric sector is
not as healthy. The last two
years have seen rapid pipe-
line spending growth fueled
by economic, government,
tax, and interest rate incen-
tives that overpowered the
underlying slow economic
growth obstacles. In addi-
tion, low natural gas prices
have allowed gas distribu-
tion utilities to undertake
large infrastructure replacement projects with users seeing
very little effect on their bills. Gas prices have bottomed and
will slowly rise, changing this dynamic.
Moving forward, a slowing of the growth rate from 2012
and 2013 is forecast (Exhibit 2). A brief and shallow eco-
nomic slowdown is forecasted in late 2014 or early 2015, as
is weak electric power demand, increasing utility bills, and
the slow rise in natural gas prices. All of that will combine to
temper the enthusiasm for additional infrastructure replace-
ment projects. By 2016, an improving economy and housing
market and a gradual increase in electricity demand will ac-
celerate spending on both pipelines and electric lines. Growth
is forecast to slow in 2017, by which point we will have
experienced more than a decade of spending growth within
Rocketing to Success
Continued from page 13
Exhibit 1
Electric/Gas T&D and Telecom Construction Put in Place Historical Figures and Forecasts
Millions of current dollars
Exhibit 2
Electric/Gas T&D Construction Put in Place Historical Figures and Forecasts
Millions of current dollars
1...,4,5,6,7,8,9,10,11,12,13 15,16,17,18,19,20,21,22,23,24,...68