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 5: Meeting Challenges in Public Utility Planning

David E. McNabb

Subjects: economics and finance, industrial organisation


5. Meeting challenges in utility planning Planning in public utilities is carried on at two separate but related levels and for different purposes. Both types of plans are necessary for achieving organization objectives. The most comprehensive level of planning is strategic planning. The purpose of strategic planning is to provide the organization with long-term direction for achieving its fundamental objectives. The second, but typically more specific level, is operational planning. The purpose of operational planning is to effectively and efficiently allocate scare resources for carrying out the work of the organization. Strategic plans usually extend over several years – typically from three to five years. Organizational plans usually cover a one-year period. Upper-level management is responsible for strategic planning – usually under the direction of the chief executive officer and other top officers. Managers and supervisors are responsible for operational planning, sometimes assisted by professional planning staff (Lewis et al. 2001). Strategic planning has three main purposes: The first purpose is to establish the specific markets and environments in which the organization will compete. The second purpose of the strategic plan is establishing the position that the firm wants to hold at some time in the future – its long-term objectives. The third purpose is to identify how the firm proposes to reach its long-term objectives. The how purpose is expressed as the strategies the organization will follow. For example, strategic options that a public utility might take include choosing to either do its own meter-reading,...

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