1. David E. Dismukes, Ph.D. Center for Energy Studies Louisiana State University June 6, 2016 Utility mergers: where’s the beef? National Association of State Utility Consumer Advocates Mid-Year Meetings, New Orleans, Louisiana

2. Overview Recently-announced utility transactions ($1 billion or more) New Natural Gas End Uses & Fuel Diversity Concerns 2 © LSU Center for Energy Studies Over the past 24 months, there have been 15 major utility merger announcements for total transaction value of over $100 billion.

3. Overview Utility mergers: historic trends & motivations New Natural Gas End Uses & Fuel Diversity Concerns 3 © LSU Center for Energy Studies Current announcements are now greater, in total transaction value, than those seen in the 1990s.

4. Overview Merger motivations New Natural Gas End Uses & Fuel Diversity Concerns 4 © LSU Center for Energy Studies Cheap money: low interest rates and high demand for high quality corporate debt. Market changes: dramatic post-2009 shift in energy markets, particularly natural gas. Growing interest in just commodity but capacity as well. Questionable growth drivers: demand changes resulting from relatively stagnant economic conditions, efficiency, behind-the-meter generation. Environmental regulations: the Clean Power Plan is one of several years of regulatory activism considerably impacting power generation.

5. Overview Review criteria and ratepayer benefits 5 © LSU Center for Energy Studies No net harm versus positive net benefits requirements. Merger standard of review Synergy savings, goodwill and cost to achieve (“CTA”). Ratepayer benefits Ring fencing. Re-opener/divestiture clause. Managing potential financial risks

6. www.enrg.lsu.edu dismukes@lsu.edu