As the U.S. Federal reserve’s decision to taper quantitative easing (stimulus) spending the associated rising interest rates that have already been realized and are projected to continue rising will weigh heavily on the utility industry’s share prices. Along with weak power demand and generation fundamentals that are eroding industry growth forecasts the utility industry has to be more and more focused on their costs of service (EEI Finance Committee, 2014). Labor costs both internally and contracted make up a large portion of costs of goods sold. As the utility industry’s core workforce of “baby boomers” begin to meet retirement age the ratio of the internal labor force to contract labor will continue to grow in favor of a contract workforce. The line worker workforce expected to retire within the next five to ten years could approach 50% in certain organizations (U.S. Department of Energy, 2006). This means that evaluating the best and most cost efficient way to utilize a contract workforce must be established.
Find out more about the cost comparisons of the different utility industry’s labor sourcing strategies here.