In the last year or so, electric-utility industry followers have been hearing about the “disruptive force” of distributed generation—how the growing number of solar panels sprouting on rooftops could be upending utility business models. Now, it seems, a potentially more powerful disruption could cause further damage to these companies’ bottom lines, as significant energy-efficiency improvements across all building types are leading us to use less of their product—electricity—even as the economy improves.

Though perhaps not as robust as we would like, the current economic recovery is making itself known in a variety of ways, including more construction starts and increased consumer spending. However, one key indicator of a growing economy—rising electricity demand—is oddly missing. While the U.S. gross domestic product rose 3.2 percent in 2013 (as of fourth-quarter figures) and is anticipated to continue climbing in 2014, electricity demand growth rates are projected to remain below 1 percent for the foreseeable future.

In its 2014 Annual Energy Outlook, the U.S. Energy Information Administration (EIA) states electricity demand will rise just 0.9 percent per year between 2014 and 2040. This follows four of the past five years in which electricity sales actually declined. With so many other indicators pointing upward—from the gross domestic product to consumer confidence—the nearly stagnant electricity-­demand growth isn’t the result of U.S. consumers suddenly turning off their flat screens and relying on ice chests rather than refrigerators. Instead, it seems that, after years of encouragement, we really are becoming more efficient.

In fact, it could be said that efficiency is becoming a competitor, of sorts, for utilities whose share prices and dividends depend, in large part, on selling more kilowatt-hours (kWh) every year. To understand the very real, cumulative effect that individual efficiency improvements can have, consider lighting. The much-ballyhooed regulations covering lamp efficiency just took effect for 60-watt-equivalent lamps (producing 800 lumens or so of illumination) on Jan. 1, 2014. As existing 60W incandescent lamps burn out, we will likely be replacing them with 13W compact fluorescent or 8- or 9W LEDs. Similarly, refrigerators—which consumed, on average, 1,800 kWh per year in 1978—should be getting by on less than 400 kWh, according to a 2014 Department of Energy standard.

Multiply those savings by millions of households across the country—along with equally large numbers of businesses upgrading their lighting and mechanical systems—and you’ll begin to see just how we seem to be breaking the previous bonds that tied economic growth to increased electricity demand. And because reliable demand growth has been a primary mover of electric-utility share values (and dividends), this slowdown is raising concern among stock watchers.

Utilities are guaranteed a rate of return, based on a valuation of their capital investments in everything from meters to substations and transmission lines. Utility customers pay that rate of return in the kilowatt-hour charges that show up in their monthly bills. In the short term, customers might even see rates go up a bit because of this arrangement, as that guaranteed return is spread over a decreasing number of kilowatt-hours sold. However, as utilities go before their state public utility commissions, they may see resistance to equipment expansion if regulators don’t see a market need.

Capital expansion already is slowing, following a period of growth enabled in part by stimulus funding for smart-grid upgrades. September 2013 projections by Edison Electric Institute, the lobbying group supported by investor-owned utilities, forecast capital expansion dropping from last year’s estimated $95.2 billion to $92.8 billion this year and $85.3 billion in 2015. And those analysts calculated an average five-year earnings growth rate of 4.1 percent, a figure that masks actual declining growth for some utilities as well as rates as high as 7 or 8 percent for other companies still in the midst of capital investment programs.

And, in states where the electricity market is deregulated—where utilities are basically electricity resellers, purchasing the power they sell customers from merchant generators—independent power producers could face significant economic stress. In fact, some experts are predicting these conditions, when combined with the growing integration of solar, energy storage and other distributed resources, could argue for reregulation.

“We think the trend is towards reregulation, not further deregulation,” writes Julien Dumoulin-Smith, executive director for U.S. electric utilities and independent power producers for Swiss banking giant UBS, in a research note to investment clients. According to him, one big factor nudging this trend forward is the interest of regulators in New York, New England and California to ensure diversity and supply of generation fuels, especially in light of those regions’ increased dependence on natural gas. California already has a long-term procurement plan in place.

“We believe New England and New York could follow suit eventually,” Dumoulin-Smith writes.