1 1 (April 1, 2020)

handle is hein.crs/govctyw0001 and id is 1 raw text is: 

               Researh Sevice

COVID-19: Potential Impacts on the Electric

Power Sector

April 1, 2020

The COVID-19 pandemic could impact the electric power sector directly (e.g., illness in the workforce)
or indirectly (e.g., reduced economic activity caused by responses by governments, businesses, and the
public at large). In the near-term (i.e., the next few weeks), most impacts will likely be caused by reduced
economic activity. Long-term impacts are highly uncertain and likely depend on the pandemic's ultimate
toll on U.S. public health and the economy.
Potential impacts include reduced electricity demand, electric reliability risks, reduced utility bill
payments, and delayed or reduced industry investment activity. Congress could choose to address these
issues, or related issues, in future bills addressing the pandemic, in annual appropriations (which are
currently being discussed for FY2021), in supplemental appropriations bills, or in other legislation.

Reduced Electricity Demand

Electricity demand is determined mainly by weather patterns and economic activity. Economic activity in
recent weeks has declined across the country, as governments take actions to slow the spread of COVID-
19. These actions have forced many businesses to close or curtail operations. Preliminary reports suggest
the reduction in business activity may be reducing electricity demand up to 18/o, though not all regions
are seeing reductions. The relative impacts of closures and mild weather are yet to be determined.
Analysis of changes in electricity usage in Italy and Spain, after those countries closed many businesses
in response to COVID-19, suggest that sustained reductions of 10%-20% are likely for as long as closures
are in effect.
Reduced electricity demand tends to lower wholesale electricity prices in the near term, as is also the case
for other energy commodities like gasoline. Consumers may not see lower retail electricity prices, though,
because of the timeline of electricity rate regulation by states.
Reduced electricity demand could persist for months or longer. If demand and prices remain low for
extended periods of time, some power plants may become unprofitable. Several parts of the country have
seen power plant retirements in recent years as changing conditions in the sector affect profitability.

                                                                 Congressional Research Service

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