Skittish Stockholders? Polling Arizona

Utilities, like the President, may face a hard fight

for this state's trust.

Should investors continue to put their faith in utilities?

The Arizona Utilities Investors Association (AUIA), which represents over 5,500 individual and business investors who own stocks in utility companies operating in the state, recently surveyed its members as well as a limited number of other interested parties to see how they compare their electric, natural gas, and telecommunications holdings to their other investments. AUIA also sought to determine investors' perceptions of the impact of competition on utility investments.

Th.Pp

e 14-percent response rate

revealed three major concerns:

1 Growing apprehension about electric investments as compared to other utility holdings. About 20 percent of respondents have already sold some or all of their electric stocks or bonds. In contrast, only 11 percent of natural gas investors and 11 percent of telecommunications investors have sold their respective utility interests.

At the same time, 63 percent of electric investors said that concerns about competition and restructuring have led them to consider abandoning their investments, while 55 percent of natural gas investors and 54 percent of telecommunications investors said they would consider selling their respective investments over these same issues.

2 Increasing fear that electric companies may lose ownership of generating capacity, a substantial business component, which in turn would mean losing company assets and value (47 percent said they were very concerned; 10 percent said they were not concerned).

3 Diminishing faith that lawmakers and regulators will protect investor rights during the transition to competition (42 percent said they don't trust them at all; 3 percent said they absolutely trust them).

Furthermore, 35 percent of electric investors said that residential rates will climb because of impending competition; 16 percent predicted that residential rates would fall. As for commercial rates, 14 percent predicted an increase due to competition, while 56 percent predicted a decline.

Other survey questions included:

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(bu Are you concerned about the impact that competition may have on the value of:

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Your electric utility investments?

90% Yes

10% No

Natural gas?

81% Yes

19% No

Telecommunications?

78% Yes

22% No

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(bu Do you see utility stocks or bonds as a long-term investment (at least five years)

in your family's financial picture?

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92% Yes

8% No

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(bu Are your utility investments an important part of your financial arsenal?

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49% Very

37% Somewhat

14% Not Very

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