Where This Election Will (And Won’t) Matter For Utilities
Elections always have consequences. They’re just rarely what investors think they will be—and almost never what’s declared beforehand in popular investment media.
In a typical voting year, few industries would face higher stakes than regulated utilities. But this November, power, heating, communications and water companies actually have little to worry about, regardless of outcome. In fact, there’s real upside, no matter who controls the federal government next year.
The most important decisions affecting utilities and essential services are always on the state level. And never in my 35 years in the advisory business have so many companies been on the same page with their regulators.
Logically, that means we have a lot to lose and little to gain from any changes. But despite the economic devastation of this year’s pandemic, that favorable regulatory compact is set to endure for the overwhelming majority of companies.
In most states, governors appoint utility regulators. And this year, only 11 governors’ mansions are up for grabs. For the other 39 and the District of Columbia, that means status quo.
Of the “contested” states, Delaware, Indiana, North Dakota, Utah, Vermont and Washington appear to be “safe” for incumbent parties. New Hampshire and West Virginia are considered “likely” for incumbents, with Missouri and North Carolina “leaning” that way.
That’s not to say utilities don’t have issues with regulators in some of these states, or that we won’t see some election night surprises. But at this point, the most likely outcome is few if any negative changes in the states, and possibly some positives.
In the one state rated a true toss-up this year—Montana—members of the Public Service Commission are directly elected by voters. The local utility Northwestern Corp (NWE) hasn’t wholly succeeded in remaining out of the limelight, with renewable energy provider contracts an issue. But unless Democrats sweep all three seats up for election, Republicans will maintain their majority of the five-member PSC—another victory for the status quo.
