Distribution utilities passing PJM costs to consumers include Exelon, First Energy, PPL, Eversource, and Unitil. Supported by state regulators and rate recovery mechanisms, regulated utilities can build new capacity with more certainty than merchant generators. These assets provide scarce, carbon-free generation as electricity demand and corporate procurement accelerate. In December 2025, GE Vernova, a major manufacturer of power generation equipment, expects to secure contracts for 80 gigawatts of combined-cycle gas turbines by the end of 2025 compared to 14 GW in 2024. U.S. planned fossil capacity additions have risen to 106 GW by 2030, with nearly 200 gas plants in development across ERCOT, MISO, PJM, and SPP. Interior Department paused five projects (Vineyard Wind 1, Revolution Wind, Coastal Virginia Offshore, Sunrise Wind, Empire Wind) due to radar interference.
Standardized performance and performance data current to the most recent month end may be found in the Performance section. Utilities ETF, as of Jun 30, 2026 rated against 53 Utilities Funds based on risk adjusted total return. The fund can be used to express a view and gain diversified access to U.S. companies that supply electricity, gas, and water. Utilities ETF seeks to track an index composed of U.S. equities in the utilities sector. Middle managers and senior leaders are caught in the middle of that tension, and how they handle it will shape the industry’s standing with regulators, boards, and the public.
Companies in the utilities sector typically beat the market average for dividends and usually experience little volatility, making them a potential fit for investors nearing or in retirement, or on the hunt for return when interest rates are low. The utilities sector represents resources that are in demand regardless of the economy’s condition—the need to heat our homes and have clean drinking water is universal and constant. We break down characteristics of the utilities sector and key investing considerations. These are the best 21 stocks in the S&P 500 right now, based on 1-year performance.
The utilities sector is on the defensive
Capital spending for a peer group of 44 North American electric utilities increased 15% nominally in the first three quarters of 2025 compared with the same period in 2024. The power and utilities (P&U) sector faces surging electricity demand, significant capital investment needs and an obligation to balance short-term energy needs with long-term sustainability goals. Further, compared with other industries, the P&U sector is much more fragmented, partially because of its unique and heavily regulated structure, which could drive broader consolidation within the next six months. Many utilities are struggling with aging and inefficient systems, particularly their back-office enterprise resource planning (ERP) and customer information system (CIS) platforms.
Jerome Powell is staying at the Federal Reserve after his chair term ends – here’s what investors need to know
- Profit margins play a crucial role in assessing the financial efficiency and investment attractiveness of utilities companies, indicating the balance between revenue generation, operating expenses, and market share dynamics.
- Keep in mind that while ETFs are more diversified than individual stocks, they are not without risk and their value can still fluctuate.
- Also unique to Barchart, this feature allows you to scroll through all the symbols on the table in a chart view.
- The EIA’s December 2025 Short-Term Energy Outlook indicates that U.S. electricity demand will continue to rise to record levels in 2025 and 2026, driven by data centers, electrification trends, and commercial and industrial growth.
It serves as a crucial indicator for investors to gauge how efficiently a company is generating profit from the equity http://www.lexa.ru/security-alerts/msg00890.html invested by shareholders. Return on equity is a key metric in the utilities sector that measures the profitability of investments and the utilization of shareholder equity to drive growth, influencing investor confidence and company valuation. Effective management of operating expenses through cost-control measures, process optimization, and strategic partnerships can contribute significantly to expanding profit margins and ensuring sustainable profitability.
Had been viewed as a stable, regulated way to participate in the AI‑driven data‑center build‑out, which requires massive incremental power demand and supports sustained rate‑base expansion. The Research Analysts’ views are subject to change at any time based on market and other conditions. Treasury yields are highly correlated and will likely remain so in the future, utility dividends have risen over time (most on annual basis) while the Treasury yield remains fixed. This spread increased from just over 400 basis points in 1990 to nearly 800 basis points in 2020 when rates were near 1.0%. Grid Strategies emphasize that overall electricity use is forecast to grow even stronger than peak power demand due to the high load factors of data centers. The EIA’s December 2025 Short-Term Energy Outlook indicates that U.S. electricity demand will continue to rise to record levels in 2025 and 2026, driven by data centers, electrification trends, and commercial and industrial growth.
Digi Power X Provides Operations and Financial Update
In an EY Industrials & Energy Brand Survey from October 2024, 45% of responding P&U executives expected to invest a high https://www.softarmy.com/60942/author-wopti-utilities.html amount in sustainability and ESG consulting and reporting over the next 12 to 18 months, compared with 32% among all respondents across sectors. In response, utilities are striving to quickly finance and build additional energy infrastructure while continuing to balance reliable energy delivery, keeping customer rates low and meeting decarbonization targets. As more consumers take an interest in renewable energy, this can provide a growth opportunity for the sector. New investment in the U.S. power grid infrastructure, the expansion of renewables and the increased power demand for data centers all support a longer-term growth story for the group. As interest rates rise, shareholders can find higher-yielding alternatives elsewhere.
In fact, a number of utilities have had their rate cases fully or partially disallowed based on challenges related to reliability, resiliency or customer service. EY research shows https://www.faststartfinance.org/2022/01/ that two-thirds of US consumers report feeling squeezed by higher energy costs and are unable to absorb a 10% increase in their bill. Furthermore, in the first half of 2024 alone, US battery storage mergers and acquisitions (M&A) volume increased 64% year over year, finishing with $2.8b of deal value.
The utilities sector is facing challenges and pressures due to geopolitical and internal factors. This set up causes unique challenges for the utilities sector as a whole and their consumers. Revenue sources in the utilities sector are diverse, ranging from electricity generation to water treatment services, ensuring a well-rounded income stream. The growth potential in the utilities sector is often limited compared to more dynamic industries, requiring investors to exercise caution and diversify their portfolios to mitigate risks.