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U.S. ENERGY INFORMATION ADMINISTRATION Competition is Causing a Surge in Electric Utility Mergers Many investor-owned electric utilities (IOUs) have merged with other utilities to improve their positions in the new, more competitive electric power industry. Over the past three years, IOUs have completed 22 mergers. By the end of 2000 another 25 pending mergers will likely be completed. One consequence of this trend is the increasing concentration of power plant ownership. By the end of 2000, the 10 largest IOUs will own approximately 51 percent of all IOU-owned power production capacity (up from 36 percent in 1992) and the 20 largest IOUs will own approximately 73 percent (up from about 56 percent in 1992). Many electric utilities are combining with natural gas production, transportation, and sales companies, creating large diversified energy companies. 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 released today by the Energy Information Administration entitled The Changing Structure of the Electric Power Industry, 1999: Mergers and Other Corporate Combinations. Other important facts and analysis in the report include: * Besides merging, many IOUs are divesting some or all of their power plants. Since late 1997, IOUs have divested, or are in the process of divesting, over 300 power plants, equivalent to 133.0 gigawatts, or 17 percent of U.S. power generation capacity. The majority of these power plants have been purchased by independent power producers who, as a group, are rapidly becoming a major segment in the power generation business. * Most divested power plants have sold for values from 1.5 to approximately 2.5 times their book values, indicating a strong competitive market for existing power plants. Nuclear power plants that were sold have not fared as well, usually selling for less than their book values. * Joint ventures and strategic alliances between electric utilities and other energy companies are becoming popular. A sample of recent joint ventures indicates that electric utilities are using them to create business opportunities in customer billing, metering, energy trading, and energy services. An electronic version of the report is available on EIA's Web site at http://www.eia.doe.gov/cneaf/electricity/corp_str/corpcomb.html. Printed copies of the report will be available in January from the U.S. Government Printing Office, 202/512-1800 or through EIA's National Energy Information Center, 202/586-8800.
EIA Program Contact: William Liggett, 202/426-1139 EIA Press Contact: National Energy Information Center, 202/586-8800 EIA-99-31 Contact:
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