By Scott Hempling
If the competition to buy a utility were first a competition to better serve the customer, the customers’ benefit would not be net zero as it commonly is. It would reflect what the winner had to offer to beat out its competitors.
ince the modern electricity merger trend started in the mid-1980s, state commissions have approved nearly 100 electric utility acquisitions. I have addressed this trend with a series of essays—sketches for a book I will complete in 2017. The first essay (“Utility Mergers: Who Has a Vision?”) introduced the problem. Because mergers of monopolies are not disciplined by competitive market forces, regulatory policies must align merging companies' interests with the public interest. They don't. When no state has a clear vision for its corporate structure future, we get results that no one intended. Consolidation among investor-owned utilities has reduced their number by half, while leaving many of our local utilities owned by conglomerates. Electric utilities are no longer your grandparents’ nest eggs, removing a historically important option for conservative investors (and therefore a source of low-cost capital of benefit to consumers).