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Consolidation in the electricity industry, in response to coming industry deregulation, began in Jul 1996 with the merger Enron Corp and Portland General. As the industry moves closer to the free market consolidation is likely to increasingly develop. However, privatization is slower for the international coal industry. Several stocks have long-term appreciation, but CalEnergy Co and AES Corp are the two highest ranked for market performance.

Stranded asset recovery and transmission access are electric utility deregulation issues that are affecting the coal and alternate energy industries. The larger independent power providers are focusing on non-US markets, and since non-competitive nuclear power-plants are decommissioned, the coal industry is expected to gain a larger domestic market share. Individual stocks must be evaluated prior to investment.

Independent power producers will likely enter the electric utility market after deregulation by California and other states. Since consolidation is probable, utilities will be able to demand lower coal prices and inhibit competition for smaller companies. Markets are expanding in China, India, and other Asian countries for independent producers, as well. Only AES Corp is expected to outperform the market, but other stocks have potential.