Participation (or lack thereof) from institutional investors to a large extent determines investor-owned utilities' (IOUs) likelihood of financially thriving or foundering. The most significant forms of this patronage, amid current market conditions, are clearly debt purchase, finance and restructuring or re-finances. Subsequent institutional interest/attractiveness in the sector's equity issues hinges on IOUs' abilities to obtain, and more importantly, sustain financing and credit worthiness. That said, overall sector health appears to be on the rise as firms continue to shore up balance sheets and grow revenue streams. Still, IOUs continue to struggle to regain their sea legs in 2003 in the wake of a sobering loss in total revenue during the fiscal year ended in 2002: off 7.6 percent from 2001-2002 from $423 billion to $391 billion. This drop in revenue (totals are for the entire sector) represented staggering declines in operating and net income, plunging 33.4 percent, and 116.9 percent respectively. August's historic blackout in the northeastern U.S. certainly added to the sector's woes, but a silver lining may emerge from this unfortunate event. As depressed equity prices lure bottom-feeding institutional investors to the table, sector firms will secure much-needed capital investments. Yet another encouraging trend is the S&P 500's Utility Index's 6.88 percent year-to-date gain, (as of 8/18/03) representing an index value of 97.76, surging from its 52-week low of 75.87. Market participants believe the index may be on track to retrace its 52-week high of 115.84, if the U.S. economy continues its steady rate of recovery.
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