Mergers and Acquisitions

Utility mergers and acquisitions are common. In theory, they increase economic efficiency. This should benefit consumers. For example, two small utilities may merge to create better economies of scale, which lowers prices for residential ratepayers. In practice, however, utility mergers can harm consumers. They can result in large multi-state or even international ownership structures that complicate state and local regulation. This is especially true when call centers and back-office work move to out-of-state affiliates, or when shareholders and foreign-owned directors pressure the local utilities to reduce operating costs and increase earnings at the expense of customers.

In the past few decades, stand-alone electric, water, and gas companies have increasingly merged with international investment firms. These firms prioritize multiple earnings goals beyond delivering basic utility services. This increases the risk to consumers. Holding merged companies accountable has become more challenging, potentially undermining consumer protections and increasing prices. During this period, numerous telecommunications companies have also changed ownership. This has decreased the availability and reliability of telephone and high-speed internet services.

Utility mergers typically require federal and state regulatory approval. Regulators determine whether a proposed merger would harm consumers through higher prices, less reliable service, deceptive marketing practices, or other consumer harms.