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Large Electrics May be Headed Toward Extinction
The majority of existing large electric-related companies willnot be intact a decade from now, says Roger Gale of WashingtonInternational Energy Group. In fact, he anticipates more than halfof the companies will disappear completely.
Only about 25% of investor-owned utilities (IOUs) think theywill be unchanged by then, while 46% of independent power producersbelieve they will be intact, he said at Gas/Mart ’98 in NewOrleans. The numbers are slightly higher for municipal utilitiesand rural cooperatives – 61% and 55%, respectively. These smallerentities think they “will survive just fine.”
Much of the industry metamorphosis is expected to be broughtabout by acquisitions, mergers, joint ventures and divestitures. Ifthe recent past is an indication, he anticipates many of themergers will be between natural gas and electric entities. “Thesuccess rate [in this area] has been high,” Gale noted, while ithas been “tough” for electrics to merge successfully. He said hewas surprised at the “extent and rapidity” of electric-gasconsolidation.
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