The company said it expects a pick-up in merger and acquisition activity on the regulated side in the second half, as well as more activity on the unregulated power side due to continued low natural gas prices.

North American power and utility merger and acquisition (M&A) activity continued to decline in the first half of the year due to uncertainties about the economic recovery, record low natural gas prices, pending and proposed environmental regulations and regulatory obstacles, according to PwC, the U.S. affiliate of the global PricewaterhouseCoopers organization.

In the first half of this year, only seven deals were announced with values greater than $50 million, totaling $4.1 billion in deal value, compared to 32 deals generating a total value of $53 billion in the comparable period in 2011, the company said Monday.

The average value of the announced deals greater than $50 million fell to $580 million in the first half compared to an average value of $1.7 billion during the same six-month period in 2011, PwC said.

"While challenges hovering over the power and utilities sector are expected to continue over the short term, the industry continues to be ripe for consolidation," said John McConomy, PwC's US power and utilities transaction services leader.

"We anticipate that the successful approval that occurred in the first half of this year will lead to stronger M&A in the regulated space in the second half.

"We expect to see more activity on the unregulated power side as well with continued low natural gas price levels and environmental compliance decisions driving deal activity as liquidity and access to investment capital becomes increasingly critical," said Jeremy Fago, PwC's US power and utilities valuation services leader.

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