Why electric utilities need industrial business

Electric utilities suffer financial stress when the market-to-book ratio is below equity and investors move to other types of savings investment. Utility-financing problems date to 1965 when inflation began pushing up interest rates. The impact is harder on utility than industrial stocks. A bright utility future requires not only a healthy economy with inflation under control, but a strong industrial-customer base. Policies that alienate industrial customers by asking them to pay a larger share of system costs and discourage industrial load growth will be counterproductive. A comparison of load demand, sales, and rates by sector shows that erosion of the industrial load lessens system stability and increases system costs. The relationship between utilities and industrial customers needs to move from its present adversarial attitude to one of communication and cooperation. 6 figures. (DCK)