Do regulatory and economic trends favor industry mergers?
Douglas G. Green
Now that some new major transactions have emerged, and financial recovery appears slowly moving forward, utility mergers are beginning to appear likely again. Although regulatory hurdles still impede new transactions, some changes at the federal level are reducing concerns about market power and competition. Plus, changing market conditions and new compliance requirements are strengthening the case for scale economics.
A fierce debate has erupted in the utility policy community, with battle lines drawn within FERC itself. In the effort to improve system efficiency, two competing alternatives stand out: to build the smart grid on large-scale demand response (DR) programs, or to build it around consumer behavior in retail markets.
Utility deals resume after 18 months of austerity.
Michael T. Burr
Utilities are taking advantage of a sweet spot in the capital markets, pre-funding and refinancing at record low rates. But cheap money won’t resolve overhanging uncertainties preventing cap-ex projects and M&A deals. Greater certainty in America’s economic and policy outlook will clear a path for strategic change.
Utilities, long accustomed to regulation by FERC and state PUCs, now face extensive regulation of their energy trading activities by the Commodity Futures Trading Commission (CFTC). Under the Wall Street Reform and Consumer Protection Act—commonly known as Dodd-Frank—signed into law July 21, 2010, energy swap contracts may be subject to new capital, margin, reporting, business conduct, and other requirements that likely will increase their trading costs and create new compliance concerns.
A renewable incentive expires with the Treasury grant program.
Philip H. Spector
With incentives under the Treasury grant program set to expire at the end of the year, green-power development once again seems to be entering the bust phase of its perennial boom-bust cycle. Statutory deadlines presage a surge in new construction beginning between now and the end of the year. What happens after that depends on Congress.
Funds collected for cost-of-removal liabilities could finance capital spending.
Michael J. Majoros Jr., et al.
The industry might be overlooking a source of capital for smart-grid and similar investments. Funds collected in depreciation accounts for cost-of-removal liabilities could finance capital spending projects.
Enhanced standards of care for companies operating in fire-prone terrain.
Utility systems are responsible for a large share of wildfires that damage billions of dollars worth of property and threaten the safety of people and wildlife. Wildfire threats have escalated in recent years, prompting utilities and regulators to develop a more rigorous approach to mitigating the risk. Leading utilities are establishing new standards of care that eventually will evolve into national best practices.
Itron deploys meter modules throughout Black Hills territory; Siemens to supply gas turbine packages to Mississippi Power; Cisco acquires Arch Rock for IP-based wireless smart metering applications; eMeter closes $12.5 million private-equity round; Enspiria helps NV Energy secure approvals for smart grid plan; American Superconductor invests in wind-turbine blade manufacturer; DOE selects 22 carbon-capture and storage projects for R&D funding; Petra Solar wins Sandia matching grant; plus announcements from Johnson Controls, Tantalus, Cooper Power, ComEd, UISOL, Convergys, SOLON and more
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