Utilities

Table of Contents

1. Overview 1

• Scales and Economies of Scale 1
• Market Structure 1
• It is a European Fort... 2
• Mergers & Acquisitions: The Key For Growth 2
• One-stop shopping: Losing the Grace? 2
• Water - The Fastest Growing Utility Sector 2
• Changing Scenario - The Indicators 3
• Supply Security - Triggering Alarm Bells 3

2. Major Issues and Trends 3

• Energy-Intensive Customers Take a New Path 3
• Lack of Skilled Workforce Boost M&A Activities 3
• Industry Regulation - An Important Determinant of Company Strategies 3
• Pressurized Margins - Redefining Success Determinants 4
• Blackouts - The ' Dark' Jeopardy 4
• Slow Reforms - Mirroring Inconsistent Deregulation 4
• Environmental Concerns: Yet to Take Full-Form 4
• Growth Potential for IT Sector 5
• Call Centers and Brand Building: A Leap Ahead in Customer Service 5
  • Emergence of Call Centers 5
  • Brand Building Efforts 5

3. A Segmental Perspective 5

• Gas Utilities 5
  • A Sector Profile 5
    • Table 1: Global Natural Gas Consumption by Region: Annual Market Estimates for 2003 through 2008 in Billion Cubic Feet for US, Canada, Japan, Europe, Asia-Pacific, Latin America and Middle East & Africa 6
    • Table 2: Global Natural Gas Consumption by Region: Percentage Breakdown for 2004 and 2008 for US, Canada, Japan, Europe, Asia-Pacific, Latin America and Middle East & Africa 6
• Europe and North America: The Isles of Demand Creating Polarized Markets ... 7
• Construction of Gas Pipelines - A Strategic Move 7
  • Table 3: Global Gas Pipelines Construction by Country: Annual Market Estimates for 2003 through 2008 in Miles for Canada, Europe, Asia-Pacific, Middle East, Africa, Latin America, and US 7
  • Running Out of Reserves: Can Imports Help? 7
  • ' Globalization' of Gas: Far from Reality? 8
  • Regulatory Reforms: Changing the Dynamics of Gas Industry 8
  • Deregulation Drives Demand 8
  • Bracing Up to the Challenges of Liberalized Market 8
• Water Utilities 9
  • A Backdrop 9
  • Water Security: Catching ' Investment' Fire 9
• Electric Utilities 9
  • Mapping the Power Utilities' Growth Line 9
    • Table 4: Global Electric Power Generation Market (2006-2007): Cost per Kilowatt Hour in Cents by Country - Denmark, Italy, Germany, The Netherlands, Belgium, UK, Spain, US, France and Australia 10
    • Table 5: Global Net Generation of Electricity by Type: Percentage Market Share for 2005, 2008, and 2010 for Coal, Petroleum, and Others 10
  • Asia Tops Demand Growth 11
  • Electric Utilities: Towards a Greener Aspect 11
  • Eco-Friendly and Innovative Products Fuel the Market Growth of Power Utility Sector 11
  • Substation Automation and Integration Programs Marks the Power Utility Sector 12
  • Protective-Relay Usage Patterns Growing in the World 12
    • Table 6: Global Electricity Consumption by Region: Annual Market Estimates for 2004 through 2010 in Billions of Kilowatt Hours for Mature Market Economies, Transitional Economies, and Emerging Economies 12
  • Risk ' Returns' ... 13

4. Mergers & Acquisitions 13

5. Strategic Corporate Developments 24

6. Products/ Services/ Concepts/ Technology Developments & Launches 26

7. Outlook 27

8. A North American Perspective 27

8a. United States 27

• Wind Energy Utilities Market 27
  • Winds of Change in the US Energy Sector 27
  • Wind Energy Market: Consolidation 27
  • Growth Prospects 28
• New Energy Policy Act: A Welcome Change 28
• Water Utilities: A Market Primer 28
  • Deregulation of Water Supply: In the Pipeline 28
• Gas & Electric Utilities: Market Review 28
  • Residential and Small Business Consumers: A Niche Unwilling to Switch! 28
  • Benefits of Waiting Game: Realized??? 28
  • Slumped by the Slow On Takers 29
  • Branding Might Help... 29
• Market Snippets 29
  • Size Does Matter!!! 29
  • Lurking with Regulatory Concerns... 29
  • Mergers & Acquisitions in the Recent Past 29
• Market Analytics - A Review By Water, Gas & Power Sectors 30
  • Water Utility 30
    • Table 7: Leading Publicly-traded Water Companies in the US (2005): Revenues in US$ Million for American Water, United Water, Aqua America, California Water Service Group, and American States Water 30
    • Table 8: Water Supply in the US: 2005 Gallons of Ground Water with Square Miles of Estuaries, Miles of Ocean and Great Lakes Shoreline, Acres of Wetlands, Great Lakes Shoreline, Lakes, Ponds & Reservoirs, and Million Miles of Rivers & Streams. 30
    • Table 9: Leading Water Treatment Service Companies' Sales in the US: Percentage Market Share for 2005 for Suez, Hercules, Drew, ChemTreat, and Others 31
  • Gas Utility 31
    • Table 10: Natural Gas Production and Supply in the US: Annual Market Estimates for 2003 through 2008 in Billions of Cubic Feet 31
    • Table 11: Natural Gas Consumption by Category in the US: 2005 in Cubic Feet Per Day for Residential, Commercial, Industrial, Electric Utilities, Lease and Plant Use, and Pipeline Fuel 31
  • Power Utility 32
    • Table 12: Leading Electric Utility Companies in the US (2005-2006): Market Capitalization in US$ Billion for Exelon, Duke Energy, TXU, Dominion Resources, and Southern Company 32
    • Table 13: Electricity Generation by Source in the US: Annual Market Estimates for 2003 through 2008 in Terawatt Hours for Coal, Nuclear, Natural Gas, Hydro Electric, and Oil 32
    • Table 14: Electricity Sales by Type in the US: Annual Market Estimates for2003 through 2008 in ' 000' s of Megawatt Hours for wholesale, and Retail 33
    • Table 15: Electricity Transmission Capacity in the US: Forecasts for 2008 in Megawatt Miles Per Megawatt by Region - East Central Area Reliability Coordination Agreement (ECAR), Electric Reliability Council of Texas (ERCOT), Florida Reliability Coordinating Council (FRCC), and Others 33
• Outlook 34

8b. Canada 34

• Overview 34
• Electric Utilities 34
  • Feeling the Heat of Supply Insecurity 34
  • Phased Liberalization: Eliminates Level Playing Field 34
  • Electric Utilities Venture into Telecom Sector 35
• Gas Utilities 35
  • Bogged Down by Conservative State Regulation 35
    • Table 16: Natural Gas Production and Consumption in Canada: Annual Market Estimates for 2003 through 2008 in Billion Cubic Meters 35

9. Japan 35

• Power Sector 35
• Gas Sector 36
  • Obstacles Faced 36
  • Enhancement of Prices and Infrastructure 36
    • Table 17: Power Production by Energy Source in Japan: Annual Market Estimates for 2003 through 2008 in Terawatt Hours for Coal, LNG, Oil, Nuclear, Hydro, and Others 36

10. A European Perspective 37

• Overview 37
• 2003 & 2004: A Snapshot 37
• European Electricity Market: A Review 37
  • Table 18: Household Electricity Consumption by Geographic Region in Europe: Annual Market Estimates for 2003 through 2008 in Terawatt Hours for France, UK, Germany, Italy, Spain, Denmark, Finland, Norway, and Sweden 38
  • Liberalization and Emissions Trading: Sparking Cost Efficiencies in the Market 38
  • Deregulation in the European Power Markets: Journeying the Time Line 38
  • Power Fuels Across EU 39
  • Supply Shortfalls & Environmental Concerns - The Nostalgia in 2003 40
• Deregulation of Gas Utilities: The Market Stand 40
  • Table 19: Natural Gas Production in Europe by Country: Annual Market Estimates for 2003 through 2008 in Billion Cubic Meters for Denmark, Germany, Hungary, Italy, Netherlands, Norway, Romania, and UK 40
  • Table 20: European Natural Gas Consumption by Country: Annual Market Estimates for 2003 through 2008 in Billion Cubic Feet for France, Germany, UK, Italy, Spain, Russia and Rest of Europe 41
  • Table 21: European Natural Gas Consumption by Country: Percentage Breakdown for 2004 and 2008 for France, Germany, UK, Italy, Spain, Russia and Rest of Europe 41
• Outlook 42
  • Fundamental Concerns Remain Intact 42
  • IT Spending in Utilities Market 42

10a. France 42

• Overview 42
• Electric Utilities 42
  • Liberalization of Small Industrial Power Markets 42
    • Table 22: Electricity Domestic Consumption in France: Annual Market Estimates for 2004 through 2010 in Number of TWh 43
    • Table 23: Electrical Energy Production through Energy Sources in France: Annual Market Estimates for 2003 through 2008 in Million Tons for Coal, Oil, Natural Gas, Nuclear, and Hydro 44
    • 10 b. Germany 44
• Overview 44
  • Table 24: Germany Natural Gas Consumption by Category: Annual Market Estimates for 2003 through 2008 in Million Tons of Oil Equivalent for Power Plants, Industry, Residential and Small Consumers, and Others 44
  • Table 25: Electric Power Generation by Source in Germany: Annual Market Estimates for 2003 through 2008 in GWH for Hydropower, Nuclear, Hard Coal, Natural Gas, Lignite, Heating Oil and Others 45

10c. Russia 45

• Industry Overview 45
• Government Initiative to Reform Market 45
• RAO UES to be Liquidated 46
• Competitive Landscape 46
• Restructuring of Nuclear Power Industry 46
• Electric Utilities 46
  • Reformation and Restructuring 46
    • Table 26: Electricity Demand in Russia: Annual Market Estimates for 2003 through 2008 in Gigawatt Hours 47
    • Table 27: Electricity Power Consumption in Russia: Annual Market Estimates for 2003 through 2008 in Terawatt Hours 47

10d. Spain 47

• Overview 47
  • Table 28: Electricity Generation in Spain by Power Sources: Annual Market Estimates for 2003 through 2008 for Production Output in Giga Watt Hours for Hydro Electric, Nuclear, Coal, and Fuel Oil/Gas 48

10e. United Kingdom 48

• Overview 48
  • Regulatory Reviews Waiting in Wings... 48
    • Table 29: Electricity Demand in the UK: Annual Market Estimates for 2004 through 2010 in Thousands of Gigawatts 48
    • Table 30: Fuel Consumption for Electricity Generation by Source in the UK: Annual Market Estimates for 2004 through 2010 in Millions of Tons for Coal, Oil, and Others 49
• Electric Utilities 49
  • Table 31: UK Electrical Power Sales and Supply in the UK: Annual Market Estimates for 2003 through 2008 in Terrawatt Hours 49
• Water Utilities 49
  • UK Water Bill: Modeling Water Flow in the Country 49
• Gas Utilities 50
  • Table 32: Natural Gas Demand by End User in the UK: Annual Market Estimates for 2003 through 2008 in Billions of Cubic Meters for Electricity Generation, Heat Generation, Energy Industry Use, Losses, Iron & Steel, Other Industry, Households, Other Final Users, and Non-Energy Use 50

11. An Asia-Pacific Perspective 50

• Overview 50
• Liberalization in Asian Utility Sector 50
• Investment Trends 51
• Costs - A Major Cause of Concern 51
• Electricity Market 51
  • An Overall Picture 51
  • A Regional Perspective 51
• Gas Utilities 52
  • Industrialized & Developing Asia: A Perspective on Upcoming Demand! 52
    • Table 33: Asia-Pacific Natural Gas Consumption by Region: Annual Market Estimates for 2003 through 2008 in Billion Cubic Feet for Australia, China, Indonesia, India, South Korea, Malaysia and Rest of Asia-Pacific 53
    • Table 34: Asia-Pacific Natural Gas Consumption by Region: Percentage Breakdown for 2004 and 2008 for Australia, China, Indonesia, India, South Korea, Malaysia and Rest of Asia-Pacific 53
• Water Resources 54
  • Table 35: Asian Water Resources By Country: 2005 Per Capita Water Availability in ' 000s of Cubic Meters for Afghanistan, Bangladesh, Bhutan, Cambodia, China, Fiji, India, Indonesia, Kazakhstan, Kyrgyz Republic Laos, and Others 54
• Outlook 54

11a. China 55

• Overview 55
• Gas Utilities 55
• Environment-Friendly Measures 55
  • Table 36: Demand for Natural Gas by Region in China: 2010 and 2015 Forecast in Billions of Cubic meters for Northeast Region, Bohai Sea Rim, Yangtze River Delta, Central South Region, Central Region, West Region, Southwest Region, and Southeast Region 56
• Power Utilities 56
  • Table 37: Power Consumption by Industry Type in China: Annual Market Estimates for 2003 through 2008 in Billion Kilowatt-Hours for Primary, Secondary, Tertiary Industries and for Daily Living 56

11b.India 57

• Overview 57
• Power Market 57
• Power Utility Sector Receives a Facelift 57
  • Table 38: Private Power Generation in India: 2005 Percentage Market Share for Commissioned Capacity by Geographic Regions for Western, Southern, and Eastern Regions 58
  • Table 39: Private Power Generation in India: 2005 Percentage Market Share for Commissioned Capacity By States (Gujarat, Maharashtra, Andhra Pradesh, West Bengal, Karnataka, Tamil Nadu, Kerala, Bihar, and Goa) 58
• Fuel Shortage - A Threat to the Sector 58
• 11c. Indonesia 58
• Electricity 58
• 11d.Australia 59
• Industry Deals with Workforce Crisis 59
• The M&A Scenario 59

12. A Latin American Perspective 59

• Overview 59
• Power Utilities: A Score Card of Opportunities & Challenges 59
  • Electricity Consumption: A Snapshot! 60
• Gas Utilities 60
  • Argentina: Most Resourceful Market for Natural Gas! 60
    • Table 40: Natural Gas Reserves in Latin America: 2005 in Billions of Cubic Meters for Bolivia, Chile, Brazil, and Argentina 60

12a. Brazil 60

• An Industry Overview 60

13. A Middle East/African Perspective 61

13a. Middle East 61

• A Brief Regional Market Scan... 61
  • Waking Up to Fresh Investments... 61
    • Table 41: Middle East Natural Gas Consumption by Region: Annual Market Estimates for 2003 through 2008 in Quadrillion British Thermal Units for Turkey, and Others 62

13b. Africa 62

• Countries Grapple with Capacity Challenges 62
• Focus Towards Cleaner Fuels 62
• Restructuring - A Life Saver 63
• Consumption and Regulation: Witnessing an Upward Spiral 63
• Natural Gas 64
  • Table 42: Natural Gas Consumption in Africa: Annual Market Estimates for 2003 through 2008 in Quadrillion British Thermal Units 64
• Sub-Saharan Africa - A Hotbed for Electric Utilities 64
  • Table 43: Electricity Demand in Kenya: Annual Market Estimates for 2004 through 2010 in Megawatts 65
• South Africa - The Largest Power Producer in Sub-Saharan Africa 65
  • 2003 & 2004: A Review 65
  • Electricity Market 66