Preparing for Financial Restructuring in the Electric Utility Industry

Authors

  • Mr. James W. Harris S eneca Fin ancial Group, In c.
  • Mr. Lawrence J. DeAngelo Seneca Fin ancial Group, In c.

DOI:

https://doi.org/10.13052/dgaej2156-3306.1243

Abstract

Th e der egu latio n of th e electric utility indus try ha s been well
publicized and mu ch discussed b oth insi de and outsi de the ind ustry.
This d er egulation pr oduces the pr ospect of un cert ai nty in a n indus -
try th at has known some level of ce rtai nty t h ro ugh t he "r a t e of
r eturn " st a nda rds imp osed by regulators to set ra tes, a nd there by
support rev enues . Accordingly, the historical concept of "used an d
useful" will no longer be th e det ermini ng facto r in calculating return.
Thi s change may produce economic dislocation given the capital
int en sit y within th e elect ric utility in dustry. The Federal Energy
Regu lat ory Commi ssi on ("FERC") has clea rly indicate d that it in-
ten ds to cr eat e a comp etitive market place for electric power. It will
accomplish this by a llowing any generatio n source "open access" to
tr an smi ssion lin es th at have been previously controlled by vertically-
int egr at ed utilities .
As a result, certain as sets , such as dist ribu ti on assets a nd some
portion of t rans mission assets, will cont i nu e to be r ate of re turn regu -
lat ed ; however, the re maining electric ut ility assets will most likely
be s ubj ect to compet itive ma r ket r eturn s.

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Author Biographies

Mr. James W. Harris, S eneca Fin ancial Group, In c.

Mr. James W. Harris is pr esid ent an d found er of Sen eca . Pr ior
t o es t a blish in g Sen eca in 199 3, he was a man a gin g dir ect or at
L ehm an Br oth ers and head of th e Financ ial Re stru cturin g Gro up.
Durin g Mr . H arris ' 10 ye a rs with L ehman , he w ork ed closely with
clie nts to rai se capital thr ough public and privat e offer ings, advise d
on l\I&A e ngage ments and was acti vely involved in th e firm 's finan -
cia l re stru cturin g assi gnm ent s. Befor e joining L ehm an in 1982 , Mr .
H arri s spe nt 10 y ear s working for Citib ank N .A.'s In stituti on al Re-
covery Gro up as a se n ior loan officer. Ov er hi s 23-ye ar ca ree r, 1'1'11' .
H arr is has been inv olved in num er ous tran sacti on s. Select ed re stru c-
turin g tr an s action s includ e Colum bia Ga s Tran smi ssi on , Des er et
Gene ra t ion a nd Tran smi ssion , Tucson El ectric, Long I sland Li ghting
Com pa ny, Allied Dep artment St ores, Texac o, Six Fla gs Amu sem ent
P ark s , Shar on St eel and Fed er at ed Dep artm ent St ores

Mr. Lawrence J. DeAngelo, Seneca Fin ancial Group, In c.

Mr. Lawrence J. DeAngelo was a vice president at Seneca
when this article was prepared. He is now with Wachovia (Atlanta
branch). Mr. DeAngelo joined Seneca in February 1995 as a vice
presid ent. Prior to Joining Seneca, he spent 3 years as an associate in
Kidder Peabody's Corporate Finance Department. Mr. DeAngelo has
participated in various corporate finance activities, including mergers
and acquisitions , divestitures and debt, preferred stock and equity
financing . In addition to Mr . DeAngelo's investment banking experi-
ence , he worked for two years at Peterson & Co. as a senior
consultant

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Published

1997-10-20

How to Cite

Harris, M. J. W. ., & DeAngelo, M. L. J. . (1997). Preparing for Financial Restructuring in the Electric Utility Industry. Distributed Generation &Amp; Alternative Energy Journal, 12(4), 44–53`. https://doi.org/10.13052/dgaej2156-3306.1243

Issue

1997: Vol 12 Iss 4

Section

Articles