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Can utility executives find happiness in back-to-basics?
Fortnightly Magazine - March 2005

rate-base investment to grow the business, and he took issue with bankers in earlier panels that said back-to-basics growth wouldn't do. Bonavia pointed out that when comparing a utility index to the S&P 500 over a 50-year period, one of the most interesting insights one finds is that the utility index and the S&P 500 are almost congruent (one right on top of the other).

"Over time utilities have performed just as well as the broader index," he says. "In times when the S&P 500 is booming, utilities lag. When it is lagging, utilities lead," he says.

From the standpoint of at least one utility's management, there is no crisis that necessitates a merger. "We are not dealing here with some crying need that has to be filled. It's a pretty healthy business. [If] we stick to our basic game plan, we'll do just fine," he says.

But he acknowledged that some utility executives will become tired of plain vanilla and will look to M&A. "Looking at the 1980s, 1990s and 2000s … eventually, they all got restless and looked in new directions, and I think the industry in this decade will as well."


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