The audit and advisory accountancy says M&A activity declined in the first half, due to:

·         Uncertainties around the economic recovery

·         Record low natural gas prices

·         Pending and proposed environmental regulations

·         Obstacles in the regulatory approval process

There were seven deals greater than $50 million in Q1, totaling just $4.1 billion. That compares to 32 deals worth $53 billion in Q1 2011. But that doesn't mean Q2 will be as calm.

"While challenges hovering over the power and utilities sector are expected to continue over the short term, the industry continues to be ripe for consolidation," warns John McConomy, the leader of PwC's power and utilities transaction service in the U.S. "Companies have been watching the regulatory approval process of major announced transactions and we anticipate that the successful approvals that occurred in the first half of this year will lead to stronger M&A activity in the regulated space in the second half."

But those new buyers are unlikely to come from overseas. PwC is seeing a significant slowdown in inbound investment due to the fear of policy and regulatory changes.

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