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 3: The Public Utility Ethics Challenge

David E. McNabb

Subjects: economics and finance, industrial organisation


Researchers investigating possible unethical activities of traders at the bankrupt energy trading company Enron, found a number of incriminating statements in the more than 2600 hours of recorded conversations taped during the 2000 and 2001 energy crisis. The recordings indicated that company traders regularly over-priced customers during the power crisis in California and other Western states (Said 2004). Enron regularly recorded their traders’ discussions to have a record of the rapid-paced ‘wheeling and dealing’ for evidence in case of trade disputes. The tapes included records of traders, who boasted of creating artificial congestion on transmission lines, shipping power away from areas where it was needed, lying about power shortages and competition for power in order to drive up spot prices, and joking about profiting from high prices for power as stealing money from ‘those poor grandmothers in California.’ This evidence of greed and market manipulation is indicative of a widespread failure in the moral standards of an important segment of the public utility industry. Following the disclosure of these and similar ethical breakdowns, both public and private organizations have been increasingly subjected to regulatory oversight and control. The drive for deregulation and privatization has been put on hold in much of the country – an outcome with significant impact on the entire industry. And this crisis in the ethical standards of utility industry managers is just one of a number of forces shaping the industry for good and bad. In addition, utility managers everywhere are also being a...

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