Buyer and seller beware

As a busy M&A period looms in the US utility sector, a wave of power plant sales seems likely. But those looking to hedge the fuel supply to these assets will find it tricky, given the current volatile gas prices. By Joe Marsh

The mergers between Pacificorp and MidAmerican Holdings, and Duke Energy and Cinergy – both announced in May – look to be just the start of a wave of consolidation in the US utility sector. And utility mergers tend to lead to power-plant sales by companies seeking to optimise their portfolios – which, in turn, is likely to bring activity in the hedging market, particularly of natural gas, as well as electricity.

Yet the question of how either the buyer or the seller of a generating facility

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