The utilities sector performed well as measured against the S&P 500 in 2018. One factor in this outperformance is the safe harbor effect resulting from expectations of economic slowdown, combined with reasonable valuations and a favorable regulatory environment. Demand for utilities continues to display inelasticity, while investment demand remains countercyclical and will be negatively impacted by an uptick in global economic activity as a whole.

On the horizon are the challenges of regulatory structures which may impede the ability to meet evolving customer expectations. Additional challenges in this sector include the requirement of leveraging AI and other new technologies to optimize operations.