Preparing for Policy Shifts Under the Trump Administration: What Investor-Owned Utilities Should Do Now
As President-elect Trump prepares to return to the White House alongside a Republican-led Congress, investor-owned utilities (IOUs) are looking at a landscape ripe for transformation. From extensions of his 2017 tax cuts and potential new tariffs to increased focus on energy production, major policy changes that directly impact the utility sector are likely on the horizon. To stay resilient in this evolving environment, IOUs need to act now.
Here are five key steps investor-owned utilities can take to get ready for 2025 and beyond:
1. Reassess Capital Allocation and Tax Strategies
With the possibility of extending or expanding the 2017 Tax Cuts and Jobs Act (TCJA), utilities may see changes to corporate tax rates and accelerated depreciation benefits. Now is the time to reassess capital allocation strategies, optimize the use of tax credits, and evaluate how best to leverage any new tax savings.
Action Step: Use tax technology tools to model various tax scenarios and assess how an extension of TCJA provisions could impact capital projects. This proactive approach can help utilities understand future capital needs and make informed spending decisions.
2. Strengthen Supply Chain Resilience Against Tariff Risks
If tariffs on foreign goods are reintroduced or expanded, utilities will feel the pinch—especially those sourcing key infrastructure components internationally. Disruptions or cost increases on materials such as steel and electronic parts could affect grid modernization efforts.
Action Step: Begin identifying alternative domestic suppliers now, and establish strategic reserve inventories of essential parts. By proactively preparing for supply chain shifts, utilities can maintain operational continuity despite tariff impacts.
3. Maximize Investment in Energy Production and Infrastructure
With a focus on domestic energy production, the administration may introduce incentives for oil, gas, and coal production, impacting the utility fuel mix and overall energy market dynamics. Additionally, there may be infrastructure funding available for utilities to enhance their grid reliability and expand capacity.
Action Step: Explore state and federal funding opportunities to offset costs of new energy production and infrastructure investments. Given potential grants or incentives, utilities should also evaluate how to diversify their energy portfolios to stay adaptable in a shifting energy market.
4. Review Compliance and Regulatory Reporting for Potential Deregulation
Deregulation policies are likely to follow this administration, potentially loosening environmental constraints or reporting requirements. While this could reduce administrative overhead, utilities must still ensure compliance with evolving federal and state requirements.
Action Step: Conduct a comprehensive review of current compliance workflows, then assess where streamlined regulatory processes or reporting tools can improve efficiency. Staying updated with legislative changes will be critical, as state regulations may still diverge from federal standards.
5. Invest in Technology for Enhanced Efficiency and Security
As the energy sector embraces digital transformation, utilities that adopt advanced technologies for operational efficiency and cybersecurity will be well-positioned to thrive. A focus on cybersecurity is essential, especially given the risks posed by increased digitization and potential new federal guidelines.
Action Step: Upgrade legacy systems to more robust digital platforms that enable data-driven decision-making and real-time insights. Prioritize cybersecurity enhancements to safeguard critical infrastructure and ensure compliance with anticipated federal cybersecurity standards.
How Lucasys Can Help
Lucasys is committed to helping utilities anticipate and adapt to policy shifts while improving operational efficiency, data accuracy, and regulatory compliance. By partnering with Lucasys, utilities can confidently approach 2025 and beyond with the tools needed to navigate change and seize new opportunities.
For more information on how we can support your strategic goals, visit us at https://www.lucasys.com/solutions.