SUPPLY CHAIN
The current supply chain crisis in the electric utility industry represents the largest intermediate-term threat to electric reliability in the country. Critical raw materials coming from overseas have been delayed and increasing costs across the supply chain threaten the ability of electric cooperatives to procure the basic electric distribution components required to provide electric service. Domestic stalled and semi-stalled labor has been diverted or demotivated from supporting manufacturing industries.
Electric Cooperatives alone own over 40% of the nation’s electric grid—more than 2.6 million miles of electric line. As mid-Atlantic Electric Cooperatives head into hurricane season, storm events could lead to widespread long-term power outages affecting member-consumers because of an inability to replace transformers and other critical equipment at any price.
Impacts to Electric
Distribution Cooperatives:
Pricing and Lead Times to Procure Products
- Transformers:
- Pricing has increased by 30% since 1st quarter of 2021.
- Manufacturers have instituted allocations for production – customers are assigned production slots.
- Lead times are now being measured in years, not months. Specific timelines are unpredictable and changing on a daily basis at time of order.
- Hardware:
- Pricing has increased between 10-50% depending on item since 2021.
- Lead time is 14+ weeks.
- Conductors:
- Pricing has increased between 10-20% due to commodity pricing.
- Lead time is 20+ weeks.
- Fiberglass Products:
- Lead time is 40+ weeks.
KEY FACTS
- Ocean container costs remain near record highs and port congestion continues to be a challenge.
- Ocean freight rates have increased 1100% since January 2020.
- Air freight rates have increased 500% since January 2020.
- End-to-end transit time from Asian supply markets exceed 70+ days and delays add weeks to wait times.
- Domestic freight availability remains constrained due to availability of trucking labor force.
- Domestic freight costs continue to rise—the Bureau of Labor Statistics index for long distance trucking has increased 30% since January 2021.
- Fuel surcharges are now common with oil prices 80% higher since January 2021.
- Labor costs continue to rise. The U.S. Labor Cost Index is projected to increase 12% above 2021 levels in 2022 and another 4% in 2023.
- Cost of commodities and raw materials remain at or near record highs.
Cost increases since 2020:
| – § Steel of all kinds (HR, Bar, Scrap, Plate) – between 95% and 201% |
| – Aluminum – 62% | – Copper – 55% | – Zinc – 42% |
| – Styrene – 100% | – HDPE Resin – 103% | –Silicon – 396% |
| –Magnesium – 203% |
