Low-carbon strategies are yielding rewards for shareholders.
Michael Rutkowski, service group leader, financial and strategic advisory, Jeffrey W. Miller, director, and Jason K. D’Souza, senior consultant, are with Navigant Consulting’s Energy Practice. Email Rutkowski at mrutkowski@navigantconsulting.com, Miller at jmiller@navigantconsulting.com, D’Souza at jd’souza@navigantconsulting.com.
2007 proved to be a strong year for utility stocks, with the Dow Jones Utility Index outpacing the Dow Jones Industrial Average by 10 percent (16 percent vs. 6 percent). This is a reversal from 2006—the first year the Industrials beat the Utility Index since 2003.
There is a story behind every company’s individual performance; however, compared to previous years, which were characterized by such broad industry strategies as back-to-basics and attempted mega-mergers, 2007 cannot be characterized by any one dominant strategy or direction by investor-owned utilities. In 2007, two IOU acquisitions by private equity groups were announced: TXU by KKR, TPG and others (closed in October), and PSE by a Macquarie-led investor consortium (still pending). The year also saw the acquisition of Energy East by a major foreign player, the Spanish utility giant Iberdrola, S.A. (still pending). However, only one traditional M&A transaction went forward, and a relatively small one at that: Aquila by Great Plains Energy (still pending).