Experts predict the top issues that utilities will have to weather this year, and beyond.
Richard Stavros is executive editor and Michael T. Burr is editor-at-large at Public Utilities Fortnightly.
At the dawn of a new year, what will 2007 bring the utilities industry? To paraphrase Charles Dickens, will it be the best of times, or the worst of times? The age of wisdom or the age of foolishness? The season of light or the season of darkness?
Some utility experts are coming to the sobering conclusion that the industry’s darkest hour may be just ahead.
After several years of extraordinary stock performance, improved balance sheets, and restored credibility—not to mention the passage of an Energy Policy Act in 2005 (EPACT) that many utility executives hoped would bring needed consolidation and more infrastructure investment—a number of disturbing trends took shape last year.
First and foremost, the political backlash in Maryland and Illinois against large but necessary rate increases changed the financial calculus utilities were using to manage higher costs and plan for new infrastructure investment.
Moreover, the failed FPL-Constellation and Exelon-PSEG mergers showed the prominent role that state regulatory commissions could play in derailing a merger when rate concessions become too onerous.