Mar 1999

Following deregulation, utilities will have to provide new services and fight to win and retain customers. Broadband transmission of data over power lines brings the opportunity to bundle information, communication, e-commerce and entertainment services, along with electricity and remote energy management. This will enable service packages to be tailored to end-users' lifestyles, potentially a strong strategic weapon if utilities can act sufficiently quickly.

Against all odds, on 19 February the Italian government approved the implementation of the EU Directive to open its electricity market to competition. There are only minor changes compared to the initial version set out in the Bersani Decree on 10 November last year, and ENEL is still obliged to sell 15 GW of capacity by 1 January 2003. Italy is likely to achieve a higher degree of competition than required by the Electricity Directive, and favourable conditions for the development of independent production that reduce the country's dependence on oil for power generation have already attracted a large number of projects by independent operators. Dr. Silvia Pariente-David and Denis Depoux Hagler Bailly Consulting Inc.

Last year, foreign utilities invested $31.3 billion in the US, while American utilities announced $24 billion-worth of foreign utility investments. This foreign appetite for US utilities does not appear to be abating, but it could be restricted by the Public Utility Holding Company Act (PUHCA). Even the acquisition of 5 per cent of voting securities by a foreign utility could subject that utility to PUHCA regulation, which most foreign companies would find unacceptable. However, there are various mechanisms that enable PUHCA regulation to be avoided.