COVID-19 impacts GE power business

GE Power China

General Electric’s power business is facing crisis in the wake of quarantines and lockdowns at U.S. power plants, Reuters reported.

Several major U.S. utilities with fleets of GE generators said they are halting or deferring maintenance because the work is not possible under social distancing restrictions. The work can be safely put off in part because coronavirus lockdowns have cut power demand, the utilities say.

Revenue from fixing power plants is important for GE because the Boston-based company has slimmed down to aviation, power equipment and medical devices.

“We have deferred routine maintenance activities to the limit possible at these facilities but are still performing the work needed to maintain reliability,” Jim Hopson, a spokesman for the Tennessee Valley Authority, which operates across seven states, told Reuters. It operates a fleet of more than a dozen large GE-made natural gas turbines.

TVA is among five large U.S. utilities with more than 130 GE turbines interviewed by Reuters. All said they are putting off some maintenance work while performing critical jobs necessary for operation, compliance and safety.

GE declined to comment, citing a quiet period. The head of its gas power business said on April 3 that crews were working on projects with more than 60 customers worldwide.

GE reported $3.6 billion in power-services revenue last quarter as compared with $5.4 billion in services revenue from aviation unit.

Maintenance of such equipment is typically provided under long-term contracts. Some bill by hours of plant or engine use. For others, accounting rules require work to be performed before GE can record revenue, industry experts said.

“GE’s financial performance will be severely impacted in 2020, as long-term service agreements have been a large source of revenue in GE’s aviation and power divisions,” said Kathy Hipple, a financial analyst at Institute for Energy Economics and Financial Analysis.

Sales of new power equipment also are at risk. “Utilities are likely to be watching power demand carefully, and may postpone capital investments until they get greater visibility on demand for power,” Hipple said.

Maintenance deferrals do not pose immediate risk to electricity supplies, utilities and industry experts say. Lower demand cuts strain on equipment. New York City power demand is down by 21 percent, on average, the New York Independent System Operator said. California’s demand fell as much as 7 percent during peaks since stay-at-home orders took effect last month.

Dominion Energy, which has about 15 large GE turbines, said it is deferring about 75 percent of its non-critical, scheduled maintenance, including large projects requiring hundreds of workers for a week or more. Some work is being canceled and other rescheduled.

Entergy, which has more than 20 large GE turbines, said it is postponing planned work that could affect power for hospitals and nursing homes. “If the crew is not able to maintain adequate social distance, the job or task should be postponed,” said Neal Kirby, an Entergy spokesman.