By Elliot Roseman and Himesh Dhungel
In The Information Age, Which Is The Best Model - A Wires Company Or An Integrated Utility?
Economic theories are not immune to Darwinian evolution. Theorists who came up with the idea of economies of scope in vertically integrated companies such as utilities must be turning in their graves as electric utilities unbundle into generation, transmission, distribution, and retail segments. Instead of creating value as one vertically integrated entity, companies are seeking to create value through specialization and expansion in just one or two segments of the industry. At the same time, to the chagrin of many utility executives and boards, stock prices are plummeting, and competition is emerging from some new quarters. For example, transmission is beginning to pose a threat to generation, distributed generation could cut into the market for both transmission and distribution, and marketers could erode the share for retailers. Some response to these
