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Law & Lawyers

CFOs speak out: Growth Strategy for the 21st Century

For The 21st Century

For The 21st Century

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So it begins again. After several financially tumultuous years, executives at many of the nation's top utilities can once again look to the horizon and ask the growth question worthy of a Caesar: "What worlds to conquer?"

Utility executives are emboldened by bulging free cash flows, improved credit quality, lower operations and maintenance costs, favorable regulatory treatment, growing service territories, and increasing demand for power.

Byline: 
Richard Stavros
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Utility M&A: Buying Time

Buying Time

Buying Time

Slowly and cautiously, utilities are moving back into growth mode.

The air is buzzing with talk of mergers and acquisitions (M&A). It can be heard in the boardroom and on the trading floor. Bankers hear it, and they see their deal backlog beginning to grow. Fund managers hear it, as they hunt for the best buys in the market before strategic investors snatch them up. Financial advisers and lawyers hear it, too; their phones are ringing more than they have in years.

Byline: 
Michael T. Burr
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Dial M for Merger

When will utilities see the next round of deals?

When will utilities see the next round of deals?

With the substantial decline in utility mergers and acquisitions (M&A) activity since the heady days of 2000, it's time to ask when M&A activity might return, if at all. Business combinations provide a potentially important means for a utility to enhance its earning and growth prospects, and one of the few alternatives available to achieve these objectives at an acceptable risk.

Byline: 
Ken Marks
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The Dividend Yield Trap

Higher payouts aren't enough over the long term.

Higher payouts aren't enough over the long term.

The past two years witnessed the ascendancy of dividend yield in the valuations of U.S. electric utilities. The recent primacy of yield in utility-industry valuations is the product of a unique confluence of factors. The collapse of most of the industry's non-regulated growth initiatives has resulted in a market that attributes little value to the industry's growth prospects beyond that which has been historically generated by the expansion of rate base-1 to 3 percent.

Byline: 
George W. Bilicic and Ian C. Connor
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Profiting from Transmission Investment

A holistic, new approach to cost/benefit analysis.

A holistic, new approach to cost/benefit analysis.

The still-fresh memories of last year's Northeast blackout coupled with rising congestion nationwide have increased awareness of the electric transmission investment shortfall in the United States. Such investment, in the right locations, would have a highly positive benefit-cost ratio. But how much should be spent?

Byline: 
Kojo Ofori-Atta, Elliot Roseman, Bansari Saha, Scott Stuart, Marc Lipschultz & Jonathan Smidt
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The Future of Fuel Diversity: Crisis or Euphoria?

The fragmented electric industry structure poses an obstacle to a more stable, diverse, and secure power supply.

The Future of Fuel Diversity

The fragmented electric industry structure poses an obstacle to a more stable, diverse, and secure power supply.

Daily news headlines have drawn attention to concerns about fuels, especially the rising prices of oil and natural gas. Fears of interruptions of oil exports from Iraq, Iran, Russia, and Venezuela (take your pick) roil the energy market. But coal is not exempt from bad news, as production declines reduce output from Eastern U.S.

Byline: 
Ellen Lapson and Richard Hunter
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Power Measurements: Welcome to ComEd, Population 1,281

What did LMPs tell us this summer in PJM's new neighborhood?

With one summer under its belt as a member of PJM, ComEd has been called a complete success by some, boring by others. Using data from Energy Velocity's Market Ops and Weather products, we can see the impact of transmission and weather on ComEd this summer.
Byline: 

Aaron Brasket, Tom Ottem, and Mike McNair

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Debilitating Doctrine

How the filed-rate policy wreaks havoc — and what courts can do about it.

Like many venerable legal rules, the filed-rate doctrine is rarely questioned. Over the last century, it has served many important purposes. However, with deregulated wholesale electric power markets at the federal level and various degrees of deregulation across the states, both the doctrine's continued applicability and usefulness are suspect.
Byline: 

Jim Rossi

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FERC Versus Bankruptcy Jurisdiction: A Double-Edged Sword

Commission Watch: Be careful what you wish for.

Financially troubled companies and their actual and potential counter-parties in many cases will continue to have difficulty in assessing business, default, and credit risks. The United States Court of Appeals for the Fifth Circuit ruled in favor of bankruptcy court jurisdiction over requests to reject FERC-jurisdictional wholesale electricity sales contracts. Yet the court did not resolve — and arguably magnified — uncertainties about the standard that should be employed by a bankruptcy court in considering such a request.
Byline: 

John P. Ratnaswamy

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The New Money Pipelines

Business & Money: Merchant plants now draw investors from three different worlds — each with its own agenda.

It's tempting to chalk up the recent bubble in merchant generation to just another industry cycle, but there's more to consider. Investors have not made a wholesale exit from power finance. It is true that many have taken significant losses. It is also true that some remain wary. Despite all this, investors continue to enter the market and address the needs of the industry today.
Byline: 

Ren Plastina

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