Fortnightly Magazine - July 2011

Reconsidering Synergies

Cap-ex plans raise the stakes for utility mergers.

Investors historically have been skeptical about merger synergies in utility mergers, assuming that regulators will insist that most or all economic benefits flow to customers. However, recent transactions suggest utilities are taking a different approach to valuing synergies that might strengthen the case for mergers — not just for the merging parties, but also for investors and regulators.

Zone of Reasonableness

Coping with rising profitability, a decade after restructuring.

With a recent flurry of gas pipeline rate investigations at the Federal Energy Regulatory Commission (FERC), many pipeline owners face the prospect of having their profits scrutinized to ensure their rates are just and reasonable. Understanding FERC’s approach will help companies ensure they’re not falling outside the zone of reasonableness.

Transactions (July 2011)

Central Vermont Public Service to acquire Fortis, Constellation Energy agrees to buy StarTex Power, Exelon enters purchase agreement for Wolf Hollow project, and others.

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