Top IOUs Ranked

Issue 10 and Volume 102.

Top IOUs Ranked

Enron Corp. tops the list of investor-owned utilities (IOUs) as ranked by size in Electric Light & Power magazine. The publication`s annual list of the top IOUs is based on information reported by Resource Data International Inc. of Boulder, Colo.

Mergers are thinning the ranks of the nation`s IOUs, in fact there are now only 99 IOUs left if you count holding companies as a single financial entity. According to the report, 11 mergers were completed in 1997 and five more early this year.

Financial analyst Ed Tirello`s famous prediction that only 50 IOUs would survive seemed outrageous when he made it about 10 years ago, but now it`s beginning to look pretty good.

One of the most notable of the recently completed mergers was Enron`s combination with Portland General Electric, placing Enron in first place in the ranking by corporate revenue. However, Enron ranks 14th in electric revenue. Another merger-driven gainer was Duke Energy, 13th in 1996 and 2nd in 1997 on the strength of its combinations with Duke/Louis Dreyfus and PanEnergy in 1997.

A striking feature of the corporate revenue rankings is the huge growth in revenue compared to last year. Last year`s first place utility, Southern Co., had $10 billion in revenue. This year`s number one, Enron, has $20 billion. That trend is reflected in many companies, partly due to mergers but also due to huge revenue growth in wholesale energy marketing activities. Duke Power, for example, got 100 percent of its revenue from electric operations in 1996, but only 35 percent in 1997, following its acquisitions in both gas and energy marketing.

More than 60 electric utilities have revenues exceeding one billion dollars a year. Average revenue for the top 10 IOUs increased from $7.4 billion in 1996 to $11.5 billion in 1997.

Largest gains in rank by corporate revenue from 1996 to 1997 are:

Northwestern Public Service Co., from 89th to 66th,

Cilcorp Inc., from 78th to 60th,

PSC of New Mexico, from 70th to 55th,

Illinova Corp., from 45th to 32nd,

Puget Sound Energy Inc., from 55th to 43rd.

Largest drops in rank:

Western Resources, from 38th to 54th,

Orange & Rockland Utilities, from 66th to 77th,

Central & South West Corp., from 11th to 17th,

American Electric Power Co. Inc., from 10th to 16th,

Consolidated Edison, from fifth to 10th.

Total IOU revenue, according to RDI, was $269 billion in 1997, up substantially from 1996`s $224 billion. With Enron now an IOU, Texas was the leading state for IOU revenue at $40 billion and California was second with $27 billion.

Leader in electric revenue in 1997 was Southern Co. at $12.6 billion, up substantially from the $10.4 billion in 1996. Enron, first in corporate revenue, had less than half as much electric revenue as Southern Co., at $5.1 billion.

Southern Co. is still the giant of the industry in electric revenue. Number two is Edison International at $8 billion.

Net income for the top 10 IOUs was down 18 percent from 1996. Their average net income was 5.39 percent of corporate revenue, down substantially from the 9.38 percent level of 1996. However, RDI reports that even these reduced average levels of income outstrip those of the Fortune 500 by 0.49 percent. p