Fisher Investments on Utilities

Foreword ix

Preface xiii

Acknowledgments xvii

Part I Getting Started in Utilities 1

Chapter 1 Utilities Basics 3

Utilities 101 4

A Defensive Sector 5

What Makes Utilities Defensive? 10

Chapter 2 A Brief History of the Electric Utilities Industry 19

Early Development in the US (1882–1935) 20

A Maturing Industry (1935–1978) 24

Market Liberalization and a New Set of Rules (1978–2009) 30

An Auspicious Start to the Twenty-First Century 36

Part II Next Steps: Utilities Details 39

Chapter 3 Utilities Sector Composition 41

Global Industry Classification Standards (GICS) 41

Global Utilities Benchmarks 42

Why Don’t Utilities Have More Weight? 43

Benchmark Differences 45

Benchmark Changes 47

Sector Benchmarks 47

Industry Breakdown 49

Chapter 4 The Electricity Business in Depth 59

The Consumer: Who Uses Electricity? 60

The Vertically Integrated Electric Utility 68

Power Generation 74

Transmission 93

Distribution 97

Chapter 5 Utilities Sector Drivers 101

Economic Drivers 102

Political Drivers 117

Sentiment Drivers 128

Chapter 6 Utilities Investing in a Resource-Conscious World 133

Energy Challenges 134

Policy Solutions 138

Technological Solutions 144

Part III Thinking Like a Portfolio Manager 155

Chapter 7 The Top-Down Method 157

Investing Is a Science 157

The Top-Down Method 160

Top-Down Deconstructed 166

Managing Against a Utilities Benchmark 173

Chapter 8 Security Analysis Contents 177

Make Your Selection 178

A Five-Step Process 179

Utilities Analysis 188

Chapter 9 Utilities Investing Strategies 195

Adding Value at the Sector Level 196

Adding Value at the Country or Industry Level 197

Adding Value at the Security Level 199

Notes 201

About the Author 207

Index 209