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That Giant Sucking Sound? Rural Distribution Territories and Utility Earnings

Fortnightly Magazine - November 15 2001

constituencies within each of these small towns. It is likely that on a per MWh sold basis, management teams spend much more time addressing the concerns of its rural rather than urban customers.

Investor-owned utilities are likely to benefit from this proposed service territory realignment in a couple of ways. First, as this article has attempted to make clear, operational profitability will receive a boost. Additionally, these transactions will likely provide utilities with a large infusion of cash. Utilities can take advantage of these streamlining moves and the availability of new cash resources to tighten their focus on strategy and move the companies in a healthier, more profitable direction.

  1. FERC Form 1 reports (1995 - 2000): www.fercform1.com) RUS Form 7 reports (1997-1999): Rural Utility Service Census 2000 data: www.census.gov
  2. The ROA figures for Carolina P&L and Entergy Arkansas represent averages from the different scenarios tested. For example Entergy Arkansas figures represent the average result between divesting "Rural South" and "Rural East".

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