Competitive Bidding in the Underwriting of Public Utility Securities

Abstract

The competitive bidding requirement in the underwriting of public utility securities has come under increasing scrutiny in recent years. The difficulties that utilities have encountered in raising funds at an historically reasonable cost have exacerbated this situation. “Utilities,” as used here, will refer to investor-owned gas and electric public utilities. The combination of reduced capital availability and rapidly expanding financial needs gives rise to a serious inquiry about whether competitive bidding in new utility underwritings can be justified on the basis of cost to the company.