Then, the exact opposite happened. Demand for electricity and natural gas snapped back with a vengeance. There are no worries if TXU has money left over, Schein said, because the PUC and the utilities will settle up in 2004 using more precise valuation methods, and ratepayers would get their money back plus interest. No business valuation method is precise, and Schein is right about TXU's stranded costs. Facing a choice of spending the money or giving it back, TXU will generate the numbers it needs.
Valuation is the key.
Reliant quibbles with my example because the IPO avoids pricing Texas generating plants and contains other lines of business besides power generation. But the handsome premiums paid by investors make my point anyway. Utilities don't need customer handouts at the moment. Regulators would use it in the same way I computed a price for Reliant Resources, multiplying the price per share by the number of shares outstanding to value the company. The markets don't lie.