These 7 States Had the Most Power Outages in 2013

This list highlights the huge amount of investment the power grid needs, and the companies set to profit from it.

May 3, 2014 at 1:10PM

There were 3,236 power outages in the U.S. in 2013, up 15% from 2012. California and Texas, the two largest states by population, had the most outages, but the rest of the list may surprise you. We'll also look at what's being done in response, the huge amount of investment the power grid needs, and two companies set to profit.

The data, compiled by Eaton (NYSE:ETN) in its Blackout Tracker annual report, shows which states have the biggest power outage problems:

  1. California
  2. Texas
  3. Michigan
  4. Pennsylvania
  5. Ohio
  6. New York
  7. Virginia


Source: Eaton.

Outages were up 15% year over year while the number of people affected by them decreased 44%, from 25 million in 2012 to 14 million in 2013. If you're wondering how that happened, while the two biggest states have the most power outages, Michigan comes in third while only having the ninth largest population.

Virginia, similarly, did markedly worse than its population would suggest. Virginia has the 12th largest population but was seventh in the number of outages.

The Department of Energy estimated last year that weather-related outages cost the U.S. $18 billion to $33 billion a year. However, Eaton estimates that the number grows to $150 billion a year if you include total electrical power outages, surges, and spikes.

One of the main causes of outages is the United States; aging equipment and the impact of severe weather. The Department of Energy estimates that 70% of the power grid's transmission lines and power transformers are over 25 years old, while the average power plant exceeds 30 years old. As the grid ages, severe weather does more damage, and weather-related outages have been increasing steadily since 1992.

A leading cause of economic damage is the existence of bottlenecks in the grid, as U.S. demand grows. Bottlenecks, when not causing blackouts, still lead to extremely high prices during peak usage.


To meet demand, from 2000 to 2010 the U.S. averaged $63 billion a year in expenditures on the power grid, and the American Society of Civil Engineers estimates that the U.S. needs to increase that amount by over $10 billion a year, to roughly $75 billion annually until 2020. Ninety percent of the additional investment is needed in the transmission infrastructure of the grid, as it expands to cope with increased demand in different parts of the country.

This need to deal with demand is where I see two opportunities.

How you can profit
ITC Holdings
(NYSE:ITC) is the best way to directly invest in the U.S. need for new transmission lines. ITC owns transmission lines from which the Federal Energy Regulatory Commission, or FERC, allows a fixed return on equity. Local regulators generally cap what companies can earn on transmission lines, but FERC allows higher rates on new transmission lines as an incentive for companies to upgrade lines and build new ones. ITC does both: It builds new lines, and it also acquires transmission line assets from local utilities and upgrades them.

In its recently released five-year plan, ITC expects to invest $4.5 billion in new transmission projects by 2018 and plans to see compound annual earnings-per-share growth of 11%-13% and compound annual dividend growth of 10%-15% on that investment. ITC currently pays a $0.14 quarterly dividend, for a yield of 1.5%. With the stock at 25 times earnings, that means you're paying up for ITC at its current price, but as the need for transmission investments grows, ITC has a long runway ahead for growth.

While ITC benefits from FERC's goal to expand the grid, Opower (NYSE:OPWR) profits from persuading consumers to use electricity more carefully. Opower works with utilities to identify consumers' power usage and then sends consumers personalized messages to nudge them to use less power. Opower also provides Web-based tools to allow consumers to control their thermostats and can show them the optimal way to use less power. Further, Opower has a suite of tools for utilities to up their customer experience and engagement -- things that utilites are generally not known for. The company is not yet profitable, but it did grow 70% last year and is continuing to add more utilities. As Opower grows, the company should become profitable as it achieves economies of scale.

3 stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Find Dan Dzombak on Twitter, @DanDzombak, or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends ITC. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information