Peoples Gas parent to be acquired in $9.1 billion deal

Posted on: June 24th, 2014 by rgadmin

Trending: Utilities are consolidating and getting bigger.

Peoples and North Shore, already part of a utility holding company headquartered in Chicago, are being bought by a Wisconsin-based utility holding company.

NICOR is owned by a utility holding company with its headquarters in Atlanta.

The acquisition of Peoples is following a trend of consolidation of regional utilities. The leading argument for consolidation is that redundant “overhead” costs can be consolidated. What consolidation usually means is that the local utility is no longer local. Remember that Peoples, NICOR, and ComEd are not competitive companies eking out an unknown profit. They have a monopoly (much like the game!) where they get to recover their set profit margin on expenses incurred in providing their essential service. That is to say, the more they spend on providing their service, the more profit they make which is why regulators approve their costs.

monopoly money

So consolidation means what? Typically, regionalized services by utilities means a loss of stable local jobs accompanied by higher costs. Remember it’s not a competitive industry. They get a regulated return for delivering energy. That’s why reducing costs does not translate to lower energy costs (note; if they spend less, they make less profit). Consolidating accounting, customer service, and management typically results in longer wait times, longer outage times, and higher returns to corporate shareholders.

The good news is that you do have competition for your energy services. Realgy Energy Services offer electric and natural gas service that is consistently below the utility. We compete for your business, by saving you money. And we do enjoy competing with bigger utilities!

Read the full Chicago Sun-Times article: “Wisconsin Energy buying Peoples Gas parent Integrys for $9.1 billion”.

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