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This report was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained herein should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy of the Department of Energy or any other organization.
This report was prepared by the staff of the Electric Market Assessment Team, Office of Coal, Nuclear, Electric and Alternate Fuels. Questions about this publication, as well as other energy inquiries, may be directed to the National Energy Information Center on (202) 586-8800 or via Internet e-mail at infoctr@eia.doe.gov. This report is accessible via the Internet at http://www.eia.doe.gov/cneaf/electricity/page/pubs.html.
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Significant contributions to the analytical content and preparation of this report were made by Brent Becker, Channele Carner, Katherine Duarte, William Keene, Ken Kincel, Sarah Loats, Billy Rush, Charles Smith, and Terry Varley.
Section 205(A)(2) of the Department of Energy Organization Act of 1977 (Public Law 95-91) requires the Administrator of the Energy Information Administration (EIA) to carry out a central, comprehensive, and unified energy data information program. Under this program, EIA will collect, evaluate, assemble, analyze, and disseminate data and information relevant to energy resources, reserves, production, demand, technology, and related economic and statistical information.
To assist in meeting these responsibilities, EIA has prepared this report, The Changing Structure of the Electric Power Industry 1999: Mergers and Other Corporate Combinations, which is the latest in a series of reports covering key issues in the electric power industry. This series of reports is intended for use by the U.S. Congress, Federal and State government agencies, the electric power industry, and the general public.
EIA is an independent statistical agency, and it does not advocate positions on public policy issues. Its responsibility is to provide timely, high quality information, and to perform objective, credible analyses in support of deliberations by public and private organizations. Accordingly, this report does not represent any policy positions of the U.S. Department of Energy or the Administration.
Executive Summary
1. Introduction
2. Organizational Components of the Electric Power Industry
3. Mergers and Acquisitions of Investor-Owned Electric Utilities
4. Convergence Mergers
5. Joint Ventures and Strategic Alliances in the Electric Power Industry
6. Divestiture of Generation Assets by Investor-Owned Electric Utilities
7. Summary and Conclusions
Appendices
A. The Public Utility Holding Company Act of 1935
B. Three Case Studies of Electric Utility Divestiture of Power Generation Assets
C. 1994 Merger of Cincinnati Gas & Electric Company and PSI Resources, Incorporated into CINergy Corporation
D. 1993 Merger of Gulf States Utilities Company into Entergy Corporation
E. Definitions of Corporate Combinations
Tables
1. Major Characteristics of Electricity Providers by Type of Ownership, 1998
2. Energy Supply Participants and Their Operations, 1998
3. Mergers and Acquisitions Between Investor-Owned Electric Utilities or Between Investor-Owned Electric Utilities and Independent Power Producers, 1992 Through September 1999
4. Comparison of the Number of Investor-Owned Electric Utilities Owning Generation Capacity, 1992, 1998, and 2000
5. Ranking of the 10 Largest Investor-Owned Companies by Ownership of Generation Capacity, 1992, 1998, and 2000
6. Government Agencies Responsible for Reviewing Mergers and Acquisitions Involving Electric Utilities
7. Selected Mergers and Acquisitions Involving Investor-Owned Electric Utilities and Natural Gas Companies, 1997 Through September 1999
8. Overview of Strategic Benefits of a Combined Electric and Natural Gas Company
9. Major Objectives of Joint Ventures and Strategic Alliances, 1996 Through June 1999
10. Status of Power Generation Asset Divestitures by Investor-Owned Electric Utilities, as of September 1999
11. Status of State Restructuring Provisions on Divestiture of Power Generation Assets, as of September 1999
12. List of the 10 Largest Investor-Owned Utility Companies Divesting Generation Assets, as of September 1999
13. List of the 10 Largest Companies Acquiring Generation Assets, as of September 1999
A1. Registered Holding Companies, as of June 1, 1998
C1. Cincinnati Gas & Electric Company/PSI Resources, Incorporated Pre-Merger Estimated Cost Savings Compared to Post-Merger Estimated Cost Savings
C2. CINergy's Estimated Post-Merger Savings in Corporate Salaries and Benefits
C3. Post-Merger Production Cost Savings for CINergy Corporation
C4. Actual Accrued and Expensed Merger Pre-Tax Costs of CINergy Corporation
D1. Entergy/Gulf States Utilities Pre-Merger Estimated Cost Savings Compared to Post-Merger Estimated Cost Savings
D2. Estimated Fossil Fuel Cost Savings Due to the 1993 Entergy/Gulf States Utilities Merger
D3. Entergy/Gulf States Utilities Merger Savings Associated with Nonfuel O&M Expense
Figures
1. Share of Utility and Nonutility Nameplate Capacity, Net Generation, Additions to Capacity, and Number of Units by Ownership Category, 1998
2. Total Utility and Nonutility Nameplate Capacity, Net Generation, Additions to Capacity, and Number of Units by Ownership Category, 1992-1998
3. Annual Growth Rate of Utility and Nonutility Nameplate Capacity, Net Generation, Additions to Capacity, and Number of Companies, 1992-1998
4. Concentration of Ownership of Investor-Owned Utility Generating Capacity, 1992, 1998, and 2000
5. Overview of Recent Merger Activity in the Northeast Region of the United States
6. Estimated Cost Savings from a Merger
7. Projections of Growth in New Gas-Fired Power Generation, 1996-2020
10. Percent of Capacity Sold by Price Range and Fuel Type, as of September 1999
11. Estimated Average Selling Price of Power Generation Capacity by Fuel Type, as of September 1999
12. Buyers of Divested Power Generation Capacity by Type of Buyer, as of September 1999
A1. States Where Registered Holding Companies are Headquartered, as of June 1, 1998
C1. CINergy's Operating Revenue, 1991-1997
C2. CINergy's Retail and Wholesale Electricity Kilowatthour Sales, 1991-1997
C3. CINergy's Subsidiaries' Wholesale Electricity Customers, 1991-1997
C4. CINergy's Subsidiaries' Total Employees, 1991-1997
C7. CINergy's and Subsidiaries' O&M Costs Minus Purchased Power Expenses, 1991-1997
C8. CINergy's Megawatthour Sales per Electric Utility Department Employee, 1991-1997
C9. CINergy's Electricity Customers per Electric Utility Department Employee, 1991-1997
C10. CINergy's Customer Expense, 1991-1997
C11. CINergy's Net Electric Utility Operating Income, 1991-1997
C14. CINergy's Total Return on Equity, 1995-1998
C15. CINergy's Total Salaries and Wages of Corporate Employees, 1991-1997
C16. CINergy's Power Production Expenses, 1991-1997
C17. CINergy's Non-Labor Administrative Costs, 1991-1997
D1. Entergy's Electric Operating Revenue, 1991-1997
D2. Entergy's Retail and Wholesale Electricity Sales, 1991-1997
D3. Entergy's Retail and Wholesale Customers, 1991-1997
D4. Entergy's and Gulf States Utilities' Electric Employees, 1991-1997
D5. Entergy's and Major Investor-Owned Electric Utilities' Retail Electricity Rates, 1991-1997
D6. Entergy's and Major Investor-Owned Electric Utilities' Ultimate Customer Revenue, 1991-1997
D7. Entergy's and Gulf States Utilities' Total O&M Cost Minus Purchased Power Expenses, 1991-1997
D8. Entergy's and Gulf States Utilities' Megawatthour Sales, 1991-1997
D9. Entergy's and Gulf States Utilities' Electricity Customers, 1991-1997
D10. Entergy's and Gulf States Utilities' Customer Expense, 1991-1997
D12. Entergy's Net Earnings per Average Common Share, 1991-1998
D14. Entergy's Total Return on Equity, 1993-1998
D15. Entergy's Steam Fuel Expense, 1991-1997
D16. Entergy's Total Nonfuel Expense Minus Purchased Power Expense, 1991-1997
D17. Entergy's Nonfuel Power Production Expenses, 1991-1997
D18. Entergy's Other Nonfuel Expenses, 1991-1997
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