Retail Power: Double Down or Fold?

Deck: 
Utility retail is at a crossroads. Energy executives must decide which path to follow.
Fortnightly Magazine - June 1 2003
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Utility retail is at a crossroads. Energy executives must decide which path to follow.

There are only two routes to creating or maintaining shareholder value in competitive retail electricity marketing: double down to grow the business significantly or fold and divest the business from its portfolio. Utilities and their competitive retail affiliates should determine today which of these two strategic bearings they wish to follow. The tentative middle ground of hold is simply a way to postpone the inevitable and erode shareholder value.

Despite the problems facing existing players and new entrants to the retail electricity markets, this may actually be the best time to expand operations and influence the retail market development process. There are short-term market conditions that favor aggressive entrants. These are coupled with longer-term structural market forces that we believe will provide aggressive but selective retail players the opportunity to create significant shareholder value.

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