Since the start of the COVID-19 pandemic, the U.S. has faced a major supply chain crisis, and the electric utility sector has been hard-hit. Supply chain constraints affect both the availability and cost of critical components required to provide reliable electric service to American consumers and businesses.
Some of the primary areas of concern include distribution transformers, conductors, utility poles, and large transformers. Utilities seeking to acquire any of these components are seeing significant delays and steep price increases. For example, a pad-mount distribution transformer now costs close to three times more than it did pre-pandemic and lead times for delivery have increased by 12 months. Large transformer manufacturing will also have major long-term issues, with demand expected to double by 2027 and the steel industry already hitting maximum capacity.
This backlog can be credited in part to a shortage in labor and parts, but it is being exacerbated by a growing need for equipment driven by population growth, abundance of infrastructure funding, broadband deployment, and pole attachment shot clocks increasing demand at a level that production cannot maintain.
Congress can assist by:
- Appropriating funding for DOE to utilize the Defense Production Act (DPA) to support the production of distribution transformers and other critically short electric infrastructure materials.
- Encouraging DOE to use DPA authority for expansion of distribution transformer production.
- Opposing the proposed DOE transformer efficiency standards.
In 2023, the North Carolina General Assembly passed House Bill 600 which allows local governments to continue to provide essential services to their communities during supply chain crises by removing some of the constraints placed on local governments’ acquisition of critical but hard-to-find equipment. ElectriCities played a critical role in the passage of this legislation, working to ensure its members can continue their reliable and affordable energy services.
