The Need for Electricity During the COVID-19 Pandemic

US utilities COVID-19 resilience shows electric utilities maintaining demand stability, reaffirming earnings guidance, and accessing the bond market for low-cost financing, as Dominion, NextEra, and Con Edison manage recession risks.

Dominion Energy (D) expects "incremental residential load" gains, consistent with COVID-19 electricity demand patterns, as a result of COVID-19 fallout. Southern Company CEO Tom Fanning says his company is "nowhere near" a need to review earnings guidance because of a potential recession, in a region where efficiency and demand response can help level electricity demand for years.

Sempra Energy (SRE) has reaffirmed earnings per share guidance for 2020 and 2021, as well timing for the sale of assets in Chile and Peru, and peers such as Duke Energy's renewables plan have reaffirmed capital investments to deliver cleaner energy and economic growth. And Xcel Energy (XEL) says it still "hasn’t seen material impact on its business."

Several electric utilities have demonstrated ability to tap the bond market, in line with utility sector trends in recent years, to lock in low-cost financing, as America moves toward broader electrification, despite ongoing turmoil. Their ranks include Dominion Energy, renewable energy leader NextEra Energy (NEE) and Consolidated Edison (ED), which last week sold $1 billion of 30-year bonds at a coupon rate of just 3.95 percent.

It’s still early days for US COVID-19 fallout. And most electric companies have yet to issue guidance. That’s understandable, since so much is still unknown about the virus and the damage it will ultimately do to human health and the global economy. But so far, the US power industry is showing typical resilience in tough times, as it coordinates closely with federal partners to maintain reliability.

Will it last? We won’t know for certain until there’s a lot more data. NextEra is usually first to report its Q1 earnings reports and detailed guidance. But that’s not expected until April 23. And companies may delay financials further, should the virus and efforts to control it impede collection and analysis of data, and as they address electricity shut-off risks affecting customers.

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