Why not? Utilities make money by power transmission. Even if every single house in the US has solar panels there still is a massive market around transferring power between houses to balance loads and time of use issues. In my direct and relevant experience talking with r&d folks and strategic planners at big utilities, they treat cheaper utilities as another market to get in to. They don't think of it as a threat to their business.

I'm not following. Let's say current transmission and generation is the baseline. In the future when there is distributed generation, transmission is definitely going to go down as generation will be tightly coupled with supplying private, commercial, or industrial entities (eg panels on the roof). So generation goes down (since more renewable), and distribution as well on average (due to coupling mechanisms).