Could U.S. Power Companies Face a Supply Chain Crisis this Summer?

The supply shortages that power companies in the U.S. have been facing, could cause issues in keeping ‘the lights on’ in the U.S. as we head into peak summer heat and peak hurricane season. Many expect consumer power use to reach all-time highs this summer, which has the potential to strain electric grids.

How the Weather Plays a Role 

Extreme weather, such as drought, heat waves, storms, etc., are all becoming more and more frequent in the U.S. “Increasingly frequent cold snaps, heat waves, drought and major storms continue to challenge the ability of our nation’s electric infrastructure to deliver reliable affordable energy to consumers,” Richard Glick, Chairman of the U.S. Federal Energy Regulatory Commission (FERC), stated.

Additionally, heatwaves are occurring throughout the U.S., which means consumers will continue to turn up their air conditioners to help combat with the strong heat. Texas, for example, a state that is known for its severe heat, was forced to urge its customers to conserve energy, after several plants unexpectedly shut down in mid-May, Reuters reported.

The American Midwest has the highest risk as demand is continuing to increase, while nuclear and coal power supplies are on the decline, reports say.

Additionally, parts of the coverage areas that the Midcontinent Independent System Operator (MISO) operates its grid, from Minnesota to Louisiana, is at more of a risk of temporary outages because of the ability to be able to preserve the integrity of the grid, reports continue. The MISO operates a power grid that covers 42 million people in 15 U.S. central states, as well as the Canadian province of Manitoba.

Preparing for Supply Shortages

Utility companies are facing supply shortages, which could have a direct impact on restoring power during outages. One piece of equipment, transformers – which sit on the top of electrical poles and convert high-voltage energy to the power used in homes – are in short supply. Some companies are having to wait at times over a year for transformer parts.

Reuters also mentions that utility companies are having a difficult time rebuilding natural gas stockpiles for this upcoming winter, due to the shutdown of dozens of coal plants in recent years and the extreme drought that cuts hydropower supplies in many western states.

Currently, utility companies are trying to be creative, as well as be conservative with the inventory of parts and equipment that they do have, as they deal with weather related issues through the regions. “We’re doing a lot more splicing, putting cables together, instead of laying new cable because we’re trying to maintain our new cable for inventory when we need it,” Nick Atkins, Chief Executive of AEP said at a conference back in March.

Some companies are also looking at alternative supply options for low voltage transformers, citing that they don’t want to use all of their inventory, but you still want to make sure you’re prepared for severe weather that may (and will) occur eventually.

Looking Forward

As always, if you would like more information regarding this topic, contact our team at InterlogUSA and we will be happy to assist you on any questions or comments you may have! In addition, we have our weekly market updates that provide relevant freight news, updates, developments across the industry, and more.


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