[BETA] Fortnightly

The next decade will bring serious disruption to the utility industry. But with cooperation from regulators and legislators, utility companies will be able to shift their business models to capture significant value—both in existing businesses and emerging ones.

Can consolidation create sustainable long-term value, or will it prove seductive but, ultimately, disappointing to shareholders, employees, customers, and management alike?

Companies that relied heavily on mergers and acquisitions generated more than half of the value in the power industry during the past 10 years. Furthermore, more than half that value was generated by a handful of companies. How did they do it?

An alternative measure of performance - not based on dividends, earnings growth or P/E ratios.

How to place a value on a utility company? That is the question.

The traditional models no longer work very well. Dividend discount models will not work well if utilities cut dividends and buy back stock to return capital to the shareholders. Earnings growth offers no reliable performance gauge either, as utilities acquire or divest large amounts of capital. Restructuring charges often become necessary to shift resources to their best use.