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Introduction
The utility industry is witnessing a period of heightened M&A activity, spurred on by national governments. At the same time, the need for improved profitability is driving utilities to search for improvements in business processes. At the wholesale level, price volatility is causing some utilities to expand their position in the value chain as they reassess their strategic risks.

Scope
An analysis of the driving factors behind M&A activity in the European and American utility sectors.

An examination of business processing outsourcing and cost-to-serve metrics.

A review of wholesale market risk and the structural hedges of key European utilities.

Report Highlights
Even where governments have no significant shareholding in a utility, there is a perceived strategic national interest in maintaining the national character of the incumbent utility. Utility consolidation is partly driven by these efforts to create and sustain national champions. The Suez-GdF merger is an instructive example.

While the general business process outsourcing and offshoring trend is increasing, there is a counter-trend with respect to front office functions that go offshore. Many utilities have refrained from sending front-office processes offshore because they fear irreparable brand damage if customer service quality falters.

In power, most European utilities have a Net Trade Requirement over 100% of their supply obligations. This provides utilities with a wide scope to sell power on the wholesale market or serve Major Energy User customers from their own power stations. In gas, the Net Trade Requirement is reversed.

Reasons to Purchase
Understand what is driving M&A activity in Europe, and how it is likely to evolve.

Understand cost-to-serve drivers and how business process outsourcing is being used to boost profitability.

Benchmark against the Net Trade Requirements for Europe's largest utilities.

Introduction
The utility industry is witnessing a period of heightened M&A activity, spurred on by national governments. At the same time, the need for improved profitability is driving utilities to search for improvements in business processes. At the wholesale level, price volatility is causing some utilities to expand their position in the value chain as they reassess their strategic risks.

Scope
An analysis of the driving factors behind M&A activity in the European and American utility sectors.

An examination of business processing outsourcing and cost-to-serve metrics.

A review of wholesale market risk and the structural hedges of key European utilities.

Report Highlights
Even where governments have no significant shareholding in a utility, there is a perceived strategic national interest in maintaining the national character of the incumbent utility. Utility consolidation is partly driven by these efforts to create and sustain national champions. The Suez-GdF merger is an instructive example.

While the general business process outsourcing and offshoring trend is increasing, there is a counter-trend with respect to front office functions that go offshore. Many utilities have refrained from sending front-office processes offshore because they fear irreparable brand damage if customer service quality falters.

In power, most European utilities have a Net Trade Requirement over 100% of their supply obligations. This provides utilities with a wide scope to sell power on the wholesale market or serve Major Energy User customers from their own power stations. In gas, the Net Trade Requirement is reversed.

Reasons to Purchase
Understand what is driving M&A activity in Europe, and how it is likely to evolve.

Understand cost-to-serve drivers and how business process outsourcing is being used to boost profitability.

Benchmark against the Net Trade Requirements for Europe's largest utilities.