My latest for @climate @BloombergNEF: U.S. consumers have never spent less on electricity; utilities have (almost) never had a higher return on equity for supplying it bloomberg.com/news/articles/… Quick thread follows
1/ @BloombergNEF and @BCSECleanEnergy writes an annual factbook of sustainable energy in the U.S. and a highlight (for me) is data on energy as a % of personal consumption expenditure. Electricity has never been lower: 1.28% in 2Q 19 bloomberg.com/news/articles/… 
2/ There are several ways to look at this data. The first is straightforward: we don’t spend much on electricity. bloomberg.com/news/articles/…
3/ The second is slightly less straightforward: Americans have added other things to their personal consumption basket (such as mobile phones and services, for instance) since the 1990s that might diminish the impact of electricity spending. bloomberg.com/news/articles/…
4/ The third is that incomes have risen, and if electricity expenditures have risen less than incomes, electricity spending will decrease in relative terms. bloomberg.com/news/articles/…
5/ At the same time, utilities do earn money from providing that electricity! And they do so mostly through a regulated return on equity. Utilities make an ask; regulators almost always approve a lower ROE. bloomberg.com/news/articles/…
6/ Here's what's happening in utility ROE - the regulatory bid/ask if you will (per @Edison_Electric). ROE is falling, and the regulatory spread is compressing too bloomberg.com/news/articles/…
6/ Utility requests are not only lower than they were years ago, they’re more closely aligned with what regulators are willing to approve. bloomberg.com/news/articles/…
7/ In the mid-1990s and the early 2000s, the average spread between the ROE utilities asked for and what they were awarded occasionally spiked above 2%. bloomberg.com/news/articles/…
8/ Since 2010, it’s been about half that much, and sometimes much lower. bloomberg.com/news/articles/…
9/ Looks like utilities are earning less...correct?
Not quite. Return on equity doesn't exist in a vacuum; there's an underlying risk-free rate to consider. That rate (the 10-year U.S. T-bill) has also fallen considerably in the last 10 years. bloomberg.com/news/articles/…
Not quite. Return on equity doesn't exist in a vacuum; there's an underlying risk-free rate to consider. That rate (the 10-year U.S. T-bill) has also fallen considerably in the last 10 years. bloomberg.com/news/articles/…
10/ Here's the risk-adjusted spread between utility ROE and the 10-year: just under 800 basis points last quarter, and even higher in 2011 and 2015. It's doubled since 1990. bloomberg.com/news/articles/…
11/ People spend relatively less on electricity than ever; utilities ask for a lower return on equity than ever; utilities get an effective higher ROE compared to risk-free rates. bloomberg.com/news/articles/…
12/ A few concluding questions. The first, is "how low can you go?" with personal spending on electricity? bloomberg.com/news/articles/…
13/ For utility CFOs, it's exactly the opposite question
14/ thanks to @BloombergNEF colleagues, @BCSECleanEnergy, and especially @climate editors @goodjillian and @DavidRovella for razor-sharp edits bloomberg.com/news/articles/… /end
