New EIA report on Industry Mergers
Happy Holidays! See you in the next thousand years…
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UFTO Note – New EIA report on Industry Mergers
An early Christmas present! This week’s issue of the ” Electric Utility Restructuring Weekly Update” arrived via email today, instead of Friday. (If you’re not a subscriber, I recommend signing up for it. It’s also available on the Internet at
http://www.eren.doe.gov/electricity_restructuring/weekly.html)
This item caught my eye. It’s an impressive compilation of data on utility mergers. the Update’s writeup came from the Sustainable Energy Coalition “Weekly Update,” Dec. 19, 1999
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In a report titled, “The Changing Structure of the Electric Power Industry, 1999: Mergers and Other Corporate Combinations,” the Energy Information Administration finds that competition is causing the number of mergers to increase rapidly. There have been twenty-two mergers completed by investor-owned utilities (IOUs) over the last three years and another twenty-five mergers will most likely be completed by the end of 2000. In addition, by the end of 2000, approximately fifty-one percent of all IOU power production will come from the ten largest IOUs. The twenty largest IOUs will have seventy-three percent of all IOU power generation capacity. Since 1997, IOUs have been divesting or have divested over 300 power plants, usually selling at prices that are 1.5 to 2.5 times their book value. Nuclear power plants have sold for far less than their book value.
The report can be retrieved [as a PDF file] at:
http://www.eia.doe.gov/cneaf/electricity/corp_str/corpcomb.html.
The complete executive summary from the report is included below.
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The EIA has a wealth of information about the industry.
Home page: http://www.eia.doe.gov/
One particularly interesting resource:
— Status of State Electric Utility Deregulation Activity Monthly
A map/chart of the status of deregulation activities by state.
http://www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html
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DOE/EIA-0562(99)
The Changing Structure of the Electric Power Industry 1999:
Mergers and Other Corporate Combinations
December 1999
Executive Summary
Since the passage of the Energy Policy Act of 1992, which opened the U.S. electric power industry to the start of competition,1 investor-owned electric utilities (IOUs) have been under pressure to cut costs, to become more efficient, and to expand their products and services. Mergers, acquisitions, asset divestitures, and other forms of corporate combinations have become widespread as IOUs seek to improve their positions in the increasingly competitive electric power industry.
Since 1992 IOUs have been involved in 26 mergers, and an additional 16 mergers are pending approval. One effect of these mergers is that the industry is becoming more concentrated. In 1992 the 10 largest IOUs owned 36 percent of total IOU-held generation capacity, and the 20 largest IOUs owned 56 percent of IOU-held generation capacity (Figure ES1). By 2000, the 10 largest IOUs will own an estimated 51 percent of IOU-held generation capacity, and the 20 largest will own an estimated 73 percent.
