The electric utility industry may be down, but it’s not out. Despite the infamous power shortages in California in 2000 and 2001 and the high-profile collapses of companies like Enron and Aquilla, independent research indicates that a healthier industrial environment will help increase U.S. demand for electric power equipment by 3.7% annually to $17.7 billion in 2006. However, the uncertain business climate for electric utilities will restrain further growth.

“Electric Power Equipment,” a new study by the Freedonia Group, shows reports that gains will be strongest in the nonutility generator (NUG) market, which will increase 5% annually to $7.7 billion in 2006. The market is expected to benefit from both healthy increases in manufacturing shipments and increased power production by NUGs, as well as increasing bulk power purchases and electricity monitoring and control by industrial firms.

Overall, the predictions point to an improvement over the 1996 to 2001 period when deregulation created an uncertain market.