Consolidation In The Regulated Electricity Sector Is Accelerating

Circumstances are converging to encourage consolidation in the electricity sector. Electricity businesses are gaining attention from investors as attractive M&A targets. Particularly on the transmission and distribution side, these highly regulated businesses tend to deliver predictable returns that are attractive in low-interest-rate markets.

Concurrently, many electricity businesses are owned by governments that face growing pressure to find efficiencies and new sources of money to fund infrastructure spending, increasing the likelihood that the business will become available for acquisition. The combined influence of these factors is starting to be felt.

Investor Demand

Electricity transmission and distribution businesses are gaining in popularity as targets for acquisition. Fortis Inc., an integrated electricity utility company that had its beginnings as a Newfoundland transmission and distribution business, acquired CH Energy Group in 2013 and UNS Energy in