PwC: North American power and utilities M&A activity falters

By Rob Starr, Content Manager, Big4.com

Power and utilities companies continue to grapple with uncertainties around the slow economic recovery, record low natural gas prices, pending and proposed environmental regulations, and obstacles in the regulatory approval process. The result?  North American power and utilities mergers and acquisitions (M&A) activity continued to decline in the first half of 2012, according to PwC US.

The industry saw an overall trend toward asset deals with an emphasis on alternative energy transactions in the first half of 2012, and although the number of power deals was down significantly, with the recent NRG-GenOn merger announcement, the outlook for increased deal activity during the second half of the year looks more promising.

Jeremy Fago, PwC’s US power and utilities valuation services leader comments:

“We expect to see more activity on the unregulated power side as well with continued low natural gas price levels and environmental compliance decisions driving deal activity as liquidity and access to investment capital becomes increasingly critical,” he said. PwC continues to see a significant slowdown in inbound investment in regulated utilities due to potential energy policy and regulatory changes and challenges where foreign interest in North American utilities and power generation is concerned.