The elctric utilities in 1991 - a perspective
If a single word was to describe 1991 for electric utilities, it would be deceptive. In so many ways the year turned out to be different than it seemed to be or at least started out to be. Industry financial trends showed little evidence of change. Yet beneath the surface, events were occurring that have probably made a restructuring of the industry inevitable. Similarly, utility stocks performed dismally in the early part of the year when the stock market staged a powerful rally. But with long-term interest rates declining during the second half of the year, utility stocks became stellar performers and ended up producing solid total returns for the year that approached those of the broad market averages. For the year, utility stocks produced a total return of 27.8 percent, almost catching the S P 500 whose return was 30.1 percent. The industry's financial trends were dominated by the continuation of unforgiving regulation that has now been present for six years. Rate needs in 1991 were modest, but even modest rate increases were once again difficult to obtain. The average return on equity that regulators allowed utilities in rate cases decided during the first half of the year was 12.6 percent, which reflected a modest decline from 12.8 percent in calendar 1990 and 12.9 percent in 1989. Utility managements were generally effective in controlling costs, as unit production costs were roughly unchanged from the year-earlier level during the first three quarters of the year. Electric demand also held up well despite the recession, and electric production rose about 2.5 percent in 1991.
- OSTI ID:
- 7279511
- Journal Information:
- Fortnightly; (United States), Vol. 129:3
- Country of Publication:
- United States
- Language:
- English
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