Dive Summary:
- Fitch doesn't anticipate that municipalities will be able to purchase investor-owned utilities in the near future, nor is it anticipated that IOUs will buy municipally owned companies.
- Local municipalities will face difficulties in either selling or purchasing electric utility assets, including receiving enough political approval to make the deal possible.
- Currently, Boulder, Colo., is attempting to form a municipal utility and buy assets owned by Xcel Energy; Florida Power & Light is also trying to buy a local utility company.
From the article:
Municipalities will likely face many obstacles in either selling or purchasing electric utility assets that impede such transactions and should continue to limit the number of successful transactions. Barriers typically include determining a mutually agreeable value and purchase price for the assets and garnering political approval from governing bodies and voter approval, which is often driven by the perceived level of risk to ratepayers. Historically mixed operating and financial performance of both publicly and privately owned utilities does not provide a definitive answer as to which type of ownership is more consistently advantageous to municipalities and, ultimately, the customers. ...