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The Business for Co-Op Acquisitions

IOUs considering co-op acquisitions are finding fertile territory for growth.
Fortnightly Magazine - January 2005

9,000 customers. Further--and contrary to conventional wisdom--there are no clear correlations between ROE and such factors as O&M costs per customer, G&A costs per customer, or the total number of customers of the candidate co-op ().

Given this fact, IOUs considering co-op acquisitions should not assume that a co-op of a given size or cost structure must represent the most attractive candidate. Screening and prioritization must be conducted carefully to identify acquisition candidates.

Indeed, all the conventional wisdom regarding co-op acquisitions should be considered suspect until proven otherwise. Although some efforts are currently under way, no IOU in recent years has made a serious and well-planned attempt to acquire an electric cooperative. The first one to do so might transform the way IOUs view their neighboring co-ops, and launch a significant trend toward co-op acquisitions.

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