Utility's Decision to Establish an Energy Services Subsidiary.

A survey of 30 utilities found a growing trend for public utilities to diversify beyond their traditional services. The author examines one area of diversification: the establishment of an energy service company as a separate subsidiary outside the regulated arena. He defines energy services to include auditing, installation, operations, maintenance, and financing on a turnkey basis, but does not cover cogeneration activities. The utilities justify this activity on the basis of business opportunities, customer service and response to private competition, utility skills and opportunity for employees, the need for load shaping, and regulatory push. Utilities which decide not to diversify cite the lack of appropriate skills or adequate return and regulation among their reasons. Other utilities adopted joint venture guarantee savings, or purchase energy savings as alternatives to diversification. 3 tables.