Repeal of the Depression-era Public Utilities Holding Company Act of 1935 was widely expected to produce a kind of merger mania, as antiquated restrictions were stripped away and true wheelin’ and dealin’ could begin. There were dire prognostications of the nation’s utilities growing into multi-state powerhouses and eventually rolling up into four or five huge mega-companies. Maybe. But so far the merger pace has been far from manic.
Ken Silverstein at EnergyBiz Insider considers the recent unwinding of FPL’s and Constellation’s merger plan, noting, for example, that to some extent where the Feds eased up, states jumped in:
In the months immediately following that repeal, a number of announced mergers had taken place and some have gone through, including the Duke Energy and Cinergy combination. But, now that New Jersey and Maryland regulators have put up major obstacles, it would appear that it is no easier to merge now than it was a year ago.
Instead of the mega-merger, PUHCA repeal appears to have made it easier for a few high profile investors (Buffet, Gates) to expand their energy industry investments. I suspect there are more deals like those that Buffet and Gates have pursued, lurking beneath the celebrity investor headlines.
Maybe we’ll get to those multi-state mega-utilities someday, but I suspect the danger was somewhat overstated in the PUHCA-repeal politicking. In the meantime, look for more smart-money experiments testing the utility landscape.