Invest in the Future:
Reinforce the Distribution System

While the transmission system delivers high-voltage electricity from generators to substations, the distribution system reduces the voltage and then delivers the electricity to retail customers. In addition to substations, the distribution system includes metering, billing, and related support systems involved in the retail side of electricity delivery.

The need to replace an aging distribution infrastructure to meet population and demand growth will require continued investment. Since the beginning of 2000, the electric power industry has invested almost $109 billion in the nation’s distribution system.  Most notably, shareholder-owned electric company investment in the distribution system surpassed $17 billion in 2006. This level of investment ($17.3 billion) represents a 6.5-percent increase over the inflation-adjusted $16.2 billion invested in 2005.¹

It is becoming more evident that rising construction material costs are an increasingly important driver contributing to the higher actual and planned utility industry infrastructure investments. According to the latest Handy-Whitman Index of Public Utility Construction Costs, since 2000 construction costs have increased by an average rate of 5.4 percent per year (37 percent since 2000) for distribution.

Over the next 10 years distribution investment is expected to be almost triple the size of projected transmission spending. Distribution investment is likely to exceed generation and environmental capital spending, as well.

¹Actual transmission and distribution investment data from EEI Annual Property & Plant Capital Investment Surveys. Planned transmission investment data from the 2006 EEI Electric Transmission Capital Budget Survey.