Expanding abroad

The electric utility business of the 1920s was controlled largely by a few big companies that had built the nation's first power plants and distribution systems. These corporations were amassing vast utility holdings across the country and, in some cases, around the world. Their operations were financed through securities held by US investors who were reaping the rewards of a soaring stock market and a booming business that was becoming an essential part of modern life. The worldwide economic collapse of the early 1930s turned the boom into a bust for many of the large power companies - particularly those with international operations that failed as their finances quickly crumbled. In its effort to rebuild the US economy and protect American consumers and investors from such catastrophe in the future, Congress enacted the Public Utility Holding Company Act (PUHCA) of 1935. A key provision of the Act forced the big electric companies to divest themselves of foreign operations. PUHCA cut the sprawling US utilities down to size and kept their operations close to home, concentrating on the astounding growth that came with society's increasing dependence on electricity. By 1992, however, the US electric utility industry had reached maturity. Growth slowed to less than 2 percent a year, and the major investor-owned power companies began to look beyond their domestic core business to achieve substantial increases in future profits. The situation is causing American utilities to look again at opportunities overseas. It is not a strategy without risk. Unforeseen changes in political, economic, and social conditions in various countries can pose a hazard for big-budget, long-term undertakings. The returns on international investments may be slow in coming, as well. The high costs of winning, developing, and building a large power facility often are incurred several years before the project begins producing revenue