Chapter 12: Challenges in Public Utility Governance
For the ﬁrst time since the mid-1930s, the question of governance has once again become an issue in public utility management. A new wave of stockholder activism is underway, driven by large institutional shareholders who charge that corporations have not gone far enough in their eﬀorts to ensure good governance. The utility industry, as much or more than some other industries, has had to endure the same scandals that have struck corporate America since the late 1990s, including improprieties in accounting, market manipulation, and executive corruption. In addition, demands for improvements in corporate governance have also been made by state public utility commissions. Some commissions have proposed regulatory changes that directly hit at governance policies and actions (Finon et al. 2004; Genieser 2004). Keohane and Nye (2000, p. 12) deﬁned governance as ‘the processes and institutions, both formal and informal, that guide and restrain the collective activities of a group.’ That deﬁnition is used here to refer to the internal and external exercise of direction, control, management, and policy shaping of all sectors of the public and investor-owned utility industry. Governance is not, and never has been, a static principle. Demands for change and more or less control over utility governance have been aired over three major waves of activism. These demands ﬁrst appeared during the Progressive Era and reached their peak during the early 1900s with the trust-busting activity of President Theodore Roosevelt’s Administration. At that time the issue was at the top of proposed reforms...
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