Since the modern electricity merger trend started in the mid-1980s, state commissions have approved nearly 100 electric utility acquisitions. I have addressed this trend with a series of essays—sketches for a book I will complete in 2017. The first essay ("Utility Mergers: Who Has a Vision?") introduced the problem. Mergers of monopolies are not disciplined by competitive market forces, while regulatory policies fail to align merging companies' interests with the public interest. When no state has a clear vision for its corporate structure future, we get results that no one intended. Consolidation among investor-owned utilities has reduced their number by half, while leaving many of our local utilities owned by conglomerates. Electric utilities are no longer your grandparents' nest eggs.
Over this 30-year period, state commissions have rejected mergers only three times: Southern California Edison and San Diego Gas & Electric (California 1991); Unisource (the holding company of Tucson Electric) and Kohlberg, Kravis Roberts (Arizona 2005); and Northwestern Utilities and Babcock and Brown Infrastructure (Montana 2007). Now we have a fourth: the Hawai'i Commission's rejection, in July 2016, of the acquisition of the Hawai'i Electric Company system by Nextera (the holding company of Florida Power & Light).1 (Full disclosure: I was a witness in the case for the State of Hawai'i.)
The Hawai'i order contained an Appendix A, entitled "Commission Guidance for Any Future Merger or Acquisition Proceedings." This addition is unusual and praiseworthy. Most state commissions merely say "no," giving no guidance for the future. . . .