Chapter 1: Public Utilities: Shaped by Challenge and Conflict
1. Public utilities: shaped by challenge and conﬂict A paradigm shift is taking place in the way public utilities are managed, regulated, and governed. The bureaucratic model of public administration developed by Max Weber and added to by Woodrow Wilson has come under attack. Traditional bureaucratic administration is giving way to market-driven managerial leadership. The historical method of governments’ regulating utilities as ‘natural monopolies’ is rapidly shifting to deregulation. In many part of the world regulated utilities face an accelerating drive for the economic eﬃciencies that are expected from free market competition. A large segment of the public sector of the industry has already been replaced by private, investor-owned businesses. However, not all of the changes to the regulatory system have been successful. The collapse of a number of deregulated and privatized utilities, the growing number of brownout and blackouts in the electricity sector, and natural gas and water shortages attest to the diﬃculties facing utility restructuring. Behind this era of modiﬁcation in the public service industry is a complex set of forces for change that are driving the shift from the traditional bureaucratic model of administration toward a new, managerial model. This shifting administrative paradigm ﬁrst appeared in New Zealand. The new way of governing was adopted in the United Kingdom in the 1970s under the leadership of Prime Minister Margaret Thatcher and shortly afterward in the United States by President Ronald Reagan. Over the last two decades of the twentieth century, the old authoritative...
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