Duke and Progress complete their merger; NRG agrees to acquire GenOn; Algonquin acquires National Grid's New Hampshire distribution business, and acquires an interest in Gamesa's Sandy Ridge wind project; plus other equity and debt transactions, totaling more than $34 billion.

The industry’s slow-and-steady pace of mergers seems to be picking up speed, as larger and well-positioned players overtake smaller and weaker targets. Realizing the greatest value from consolidation requires companies to assess their strengths and weaknesses and focus on performance improvement—both before and after a deal gets done.

Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to cross-subsidies, inequitable outcomes, and perverse incentives. An objective-based approach can better communicate costs to customers in a way that better serves operations and policy goals.

As the industry resumes major capital-spending programs, utilities and their stakeholders are rightly concerned about the effects on prices. Traditional regulatory approaches expose utilities to risks and costs, and can bring rate shock when capital spending finally makes its way into customers’ bills. Pre-funding investments can provide a smoother on-ramp to bearing the costs of a 21st-Century utility system — but it also raises questions for utilities to address.