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Public Utilities, Second Edition

Old Problems, New Challenges

David E. McNabb

A thoroughly updated 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 five sectors of the utility industry: electric power, natural gas, water, wastewater systems and public transit.
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Chapter 17: Public utility management ethics

David E. McNabb


Researchers investigating possible unethical activities of traders at the bankrupt energy trading company Enron, found a number of incriminating statements in the more than 2,600 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. 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 major failure in the moral standards of a large part of the public utility industry. The greed exhibited on the grand scale of Enron in the state of California is not the type of ethics breech that most public utility managers and administrations must contend with. Compared to the millions of dollars stolen in the Enron example and the $1.1 million taken by the water utility in Seattle, Washington or the little more than $244,000 embezzled by a middle-aged bookkeeper from a utility serving a North Dakota Indian Reservation might sound like small change. But it was a large amount to...

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