Santa Fights Economic and Industry Trend Headwinds

If Santa thinks the North Pole is dark, he should see how things are going with the economy and possibly even the utility industry. As the big man makes his way south with Christmas gifts, he and his reindeer will have to fight a few not-so-jolly headwinds.

To his surprise, Santa may find that utilities want a lump of coal instead of a new sweater under the Christmas tree. That’s because NERC, North America’s reliability and security overseer, is warning that a large part of the country faces reliability risks this winter. Extreme winter weather could add demand to an electric grid already strained by power plant shutdowns and issues delivering coal and natural gas. In New England and California, natural gas pipelines will be constrained, limiting production. With ongoing freight rail issues, some generators may be wishing their coal was delivered by Polar Express. 

Meanwhile, supply chain pressure plagues not only your 13-year-old’s desire to get a PlayStation 5 this Christmas but also a utility’s ability to procure needed supplies. The ongoing lack of transformers could make it difficult to restore power during severe winter storms. In addition, Santa might think twice before switching to an electric sleigh since the increased demand on the system from electric vehicles (EVs) could further strain grids. That is, if he can wait a few months until EVs and their parts are back in stock. 

In fulfilling his Christmas duty, Santa also has to fight the current biggest economic challenge—inflation. Many consumers find themselves having to cut spending on Christmas gifts or forego buying gifts completely this year as rising prices push them to make difficult choices. Those who are fortunate enough to be able to afford the holiday traditions may be driving up demand as they make Christmas purchases and book holiday travel. If their purchasing power outweighs the loss of demand by those cutting their budgets, we may be at risk of more inflationary pressure. 

Is relief coming soon? Well, the CFC economic and industry research teams have written a letter to Santa. All we want for Christmas is for things to go back to normal. 

Jan Ahlen, CFC vice president of utility research and policy, contributed to this article.