Six characteristics of leading performers in the utility industry

July 10, 2023
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This article was originally published in Quarterly Issue 2 of Electric Energy Online.

With the backdrop of energy transition, growing pressures for a more sustainable future, as well as an evolving policy environment, companies in the electric and gas utility sector are facing unprecedented change and uncertainty. Additionally, the volatility and uncertainty in both financial and energy markets more broadly are contributing to a challenging business environment for the utility sector.

To provide context for utility management on how to address these challenges, we analyzed the performance of 48 publicly listed US utility companies over the past seven years. The primary objective was to draw lessons on how leading performers have navigated these challenges. As would be expected in a time of change, it observed a wide gap between the top and bottom quartile performers in terms of total shareholder return (TSR) and terms of EV/EBITDA multiples, suggesting that the market sees very different growth and return potential across companies in the sector.

This article highlights six characteristics of top-tier performers and explores the drivers contributing to superior performance.