Public Utilities

Public Utilities

Management Challenges for the 21st Century

David E. McNabb

An introduction to the current issues and challenges facing managers and administrators in the investor and publicly owned utility industry, this engaging volume addresses management concerns in three sectors of the utility industry: electric power, natural gas, and water and wastewater systems. Beginning with a brief overview of the historical development of the industry, the author looks at policy issues and discusses management ethics. He then examines a number of the major challenges in these organizational functions: management and leadership, planning, marketing, accounting and finance, information technology, governance, and human resources. In the final section of the volume he looks at issues specific to each of the three industry sectors.

Chapter 1: Public Utilities: Shaped by Challenge and Conflict

David E. McNabb

Subjects: economics and finance, industrial organisation


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 A large segment of the public sector of the industry has already been replaced by private, investor-owned businesses.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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