Electric utility mergers more likely as competition spreads
Cincinnati Gas Electric and PSI Resources announced December 14 their agreement to merge through a stock swap. This is the first electric utility merger announced since the Energy Policy Act was passed by Congress in October. The new law clearly was an important factor in both motivating and timing the merger. The pressures that induced PSI and Cincinnati to enter into a merge agreement did not exist as little as five years ago. For almost 50 years, the Public Utility Holding Company Act (PUHCA) provided utilities with protection from potential competitors and corporate raiders by threatening to engulf the predator in its regulatory net. A utility's monopoly position was secure whether it was efficient or not. The incentive for utilities to merge and to do so soon has increased dramatically. This stems partly from the increase in competition generally, but mostly from the Energy Policy Act's amendments to PUHCA that provide for exempt wholesale generators (EWGs). EWGs are companies that engage exclusively in the generation of electric power for sale at wholesale, and they may be owned by other companies without either the EWG or owner becoming subject to PUHCA jurisdiction. Thus, any company through an EWG can build a power plant to sell power at wholesale anywhere in the country without being subject to PUHCA jurisdiction. This has created a real and identifiable competitive threat for every utility.
- OSTI ID:
- 6353315
- Journal Information:
- Public Utilities Fortnightly; (United States), Journal Name: Public Utilities Fortnightly; (United States) Vol. 131:4; ISSN PUFNAV; ISSN 0033-3808
- Country of Publication:
- United States
- Language:
- English
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