Utilities need true 'back to basics' strategy, Fitch analyst says

Washington (Platts)--2Jul2004

It will take years for utilities to truly pursue a "back-to-basics" strategy
and some investors fear the companies will re-enter risky businesses as soon
as their balance sheets improve, Fitch Ratings analyst Ellen Lapson said in
report Thursday. Many investor-owned utilities shed non-core operations such
as exploration-and-production, energy trading and overseas operations recently
after creditors began to frown on such activities. Lapson suggested executives
focus on the downsides to their non-core ventures, rather than just their
earnings potential, and consider shielding utility assets with a parent
holding company structure. Lapson described her own elements of a "rational"
business basics strategy that would take five to 10 years to implement:
Safeguard regulatory relations and public image; identify consumers'
unrecognized needs; provide service that consistently satisfies consumer
needs; manage costs; identify and control risks; and eliminate activities that
consume too much capital.

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