MISSION: Southwest Research and Information Center is a multi-cultural organization working to promote the health of people and communities, protect natural resources, ensure citizen participation, and secure environmental and social justice now and for future generations

Utility Deregulation Brings Mega-Mergers:

One-stop, one-company shopping for homeowners?

Merger activity among electric utilities has more than tripled since 1996. That year there were six proposed mergers. In 1997 there were 16. And in 1998 there were 20 proposed mergers, two of which involved foreign companies entering the U.S. market. (Scottish Power purchasing PacifiCorp for $7.9 billion and National Grid Group purchasing New England Electric System for $3.3 billion.)

In addition to this, major U.S. holding companies such as Southern Company, Duke Energy Corporation, Entergy Corporation and Edison International have been purchasing power plants and transmission systems in foreign countries ranging from Romania to New Zealand. Combinations of systems of gas and electric systems have also become common and the size and scope of the mega-mergers has grown each year.

One proposed merger between CalEnergy Company, a global energy company, and MidAmerican Energy Holdings, a holding company with electric and natural gas operations in Illinois, Iowa, South Dakota, and Nebraska, would combine revenues of more than $5 billion and serve 3.3 million customers. In addition to the merger plan, MidAmerican purchased the nations's third largest real estate organization, followed by purchases of Nebraska's two largest real estate firms. Herb Freeman, formerly chief executive officer of CBS Home, stated that when deregulation came to the region, the intent would be to sell a home complete with energy supply.

... Three months [after the FERC declined to institute a moratorium on mergers of large electric utilities with more than a million metered accounts, called for by the APPA and the National Rural Electric Cooperative Association], American Electric Power Company and Central and South West Corporation proposed to combine their operations in a new company that would be the nation's largest electric utility. It would serve 4.7 million customers in ... 1 1 states from northern Michigan to south Texas [Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia]. Critics claimed that the merger could have far reaching structural impacts on bulk power markets and the vitality of competition in this region.

From Season of Change, by Scott Ridley (APPA, 1999). Reprinted by permission of the American Public Power Association.