Competition causing a surge in electric utility mergers

Store Equipment & Design, March, 2000

The Energy Information Administration (EIA) attributes the recent rash of mergers among investor-owned utilities (IOUs) to the utilities' desire to improve their positions in the new, more competitive electric power industry.

The EIA reports that over the past three years, IOUs have completed 22 mergers, and by the end of this year another 25 are likely to be completed. By the end of the year, the 10 largest IOUs will own approximately 51 percent of all IOU-owned power production capacity, and the 20 largest IOUs will own approximately 73 percent.

In addition, since 1997, 20 mergers between IOUs and natural gas companies have been completed or are pending completion, suggesting a convergence of the electric power and natural gas industries.

These facts are contained in a report recently released by the EIA called The Changing Structure of the Electric Power Industry, 1999: Mergers and Other Corporate Combinations.