Frontlines
Will a back-to-basics strategy meet investor expectations?
It's an issue that is coming to the fore with greater force-the debate over how utilities should honor their obligation to stockholders. But this time there seems to be quite a difference of opinion over strategy-or so we found in our annual finance issue.
People
New Opportunities:
Peabody Energy named Charles "Chuck" Burggraf group executive of Colorado operations, responsible for Twentymile Coal Co.'s Twentymile Mine near Oak Creek and development of additional coal reserves in Colorado. Burggraf most recently served as operations manager of the Twentymile Mine.
Wisconsin Public Service promoted Charlie Schrock and Larry Borgard. Schrock is now president and COO of operations; Borgard becomes president and COO of energy delivery.
Power Measurement
Failing the Market-Power Test:
How FERC's ruling could affect wholesale power markets.
Perspective
Hard-and-fast ring-fencing rules are not the best way to maintain order in the partially deregulated utility sector.
In 1992, my colleagues on the Michigan Public Service Commission (MPSC) and I initiated the first retail wheeling case in the country. Retail wheeling was the old name for competition, back when everyone thought that moving electrons from one place to another was a relatively simple task, one that could not in any way harbor underlying sinister acts or motives.
Commission Watch
The AGs' Global Warming Suits:
A recent lawsuit filed by eight state attorneys general will take the industry to the place where bad policy meets with bad economics.
Diversified companies lead (and the globals lag) over the past five years.
Business & Money
Winners and Losers:
Diversified companies lead (and the globals lag) over the past five years.
The unbundling of services and companies in the electricity and natural gas industries have created unprecedented opportunities to reinvent the traditional integrated utility model, with a broader array of attendant risks and rewards. But this past year was clearly one of retrenchment and strategic soul searching, allowing an opportunity to re-examine the sector for winning business formulas.
James Coyne and Prescott Hartshorne
Technology Corridor
Cyber and Physical Security:
Although NERC and other agencies are helping out, utilities still face internal obstacles.
For The 21st Century
Interviews by
So it begins again. After several financially tumultuous years, executives at many of the nation's top utilities can once again look to the horizon and ask the growth question worthy of a Caesar: "What worlds to conquer?"
Utility executives are emboldened by bulging free cash flows, improved credit quality, lower operations and maintenance costs, favorable regulatory treatment, growing service territories, and increasing demand for power.
Buying Time
Slowly and cautiously, utilities are moving back into growth mode.
The air is buzzing with talk of mergers and acquisitions (M&A). It can be heard in the boardroom and on the trading floor. Bankers hear it, and they see their deal backlog beginning to grow. Fund managers hear it, as they hunt for the best buys in the market before strategic investors snatch them up. Financial advisers and lawyers hear it, too; their phones are ringing more than they have in years.
When will utilities see the next round of deals?
With the substantial decline in utility mergers and acquisitions (M&A) activity since the heady days of 2000, it's time to ask when M&A activity might return, if at all. Business combinations provide a potentially important means for a utility to enhance its earning and growth prospects, and one of the few alternatives available to achieve these objectives at an acceptable risk.
