4 reasons why the way power industry coordinates needs to change

For decades, the way utilities bought equipment and materials stayed roughly the same. Specs went out to a few trusted distributors. Quotes came back. A supplier was selected. It worked.

That process is now running into conditions it was never designed for. Here is what has changed.

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1. The amount of money being spent has never been higher.

The Edison Electric Institute projects that investor-owned utilities will spend more than $1.1 trillion on capital projects between 2025 and 2029. That is a 44% increase over the prior five years, and more than the industry spent in the entire decade before it.

At that level of spending, small inefficiencies in how materials get sourced add up fast. A procurement process that only sees part of the available supply market was manageable when programs were smaller, but at $1.1 trillion, the math is different.

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2. The supply chain is tight, and that makes market access more valuable.

Equipment that used to arrive in a few months now takes years to procure. The North American Electric Reliability Corporation reported that large power transformer lead times hit an average of 120 weeks in 2024 — more than two years — with some units taking up to 210 weeks. Wood Mackenzie projects those shortages will continue through 2030.

When supply is this constrained, the manufacturers a procurement team can see determines what options they actually have. Manufacturers outside the standard distribution channel may have open capacity. Most sourcing processes never reach them.

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3. Input costs are rising fast, and they flow directly into the rate base.

The cost of key materials has increased sharply. Utility Dive reported in January 2026 that copper wire, cable, and switchgear were all up more than 60% from 2020 levels, with tariffs and supply chain disruptions continuing to push costs higher.

Those input costs don't disappear. They show up in project budgets, in rate case filings, and eventually on the customer's bill. The wider the pool of manufacturers a team can compare, the more tools they have to offset that pressure before it compounds.

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4. Regulators are paying closer attention to how procurement decisions get made.

PowerLines reported in January 2026 that utilities requested a record $31 billion in rate increases in 2025 — more than double the year before — and that electricity prices have risen nearly 40% since 2021. The response has been direct: commissioners have lost reelection bids, attorneys general have stepped into rate proceedings, and state legislatures have launched affordability investigations.

In that environment, intervenors in rate cases are asking a specific question: when you sourced materials for this program, how many qualified manufacturers did you evaluate?

Analyst Julien Dumoulin-Smith described the shift as utilities needing a "customer permission slip" for capital deployment, meaning the expectation is no longer just that money gets spent, but that it gets spent efficiently, with documentation to show it.

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All of these forces point in the same direction. Utilities are spending more, sourcing in a tighter market, absorbing higher input costs, and doing all of it under a level of regulatory scrutiny that did not exist five years ago. A procurement process designed for a different era — one with smaller budgets, shorter lead times, and less public accountability — is not equipped to perform under these conditions. The question for procurement teams is no longer whether the old process worked. It is whether it can still work now, and what it costs when it does not.

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