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 13: Challenges in the Electric Energy Industry

David E. McNabb

Subjects: economics and finance, industrial organisation


A few minutes after 4:00 p.m., Eastern Daylight Time, on the afternoon of August 14, 2003, an enormous electricity blackout hit much of the Eastern United States and Canada. Something like 50 million people were suddenly and completely without electric power. In little more than half an hour, nearly 62 000 megawatts of electricity had fallen off-line. Affected were the Canadian Province of Ontario and the states of Connecticut, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Vermont. In some areas, the power was out for two full days; parts of Ontario suffered rolling blackouts for more than a week before full restoration of power (McCann 2004). An investigation under the direction of a joint U.S. and Canadian task force reported that the power outage was probably caused initially by the failure of the Ohio grid operator to adequately control tree growth in its transmission rights-of-way. This was cited as the cause of an outage of three local transmission lines over 36 minutes beginning at 3:05 p.m. EDT. This caused congestion overloads on other parts of the grid. In addition, the grid regulators failed to diagnose the problem in time to avoid the loss at 4:06 p.m. of an overloaded major transmission line. Loss of this line, in turn, resulted in loads that were too heavy being placed on other lines. To avoid permanent damage to the grid and related equipment, automatic shutdowns fell into place across the entire interconnected grid. By 4:...

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