Management Challenges for the 21st Century
Chapter 10: Utility Finance and Accounting Challenges
10. Utility ﬁnance and accounting challenges The drive for deregulation and restructuring of the public utility industry has brought substantial modiﬁcations to its regulatory structure. This, in turn, has resulted in a host of new challenges being added to the traditional problems of ﬁnancial managers. Public utility ﬁnance oﬃcers must now focus on more than the old questions of return on investment and recovery of investments in the industry; they are becoming more involved in justifying the investment and operating decisions that must be made to meet the needs of a newly designed, unbundled, industry that is characterized by ﬁnancial turmoil. Public utilities have always been heavily dependent upon outside investment. There are few if any industries that are so consistently in need of large infusions of capital. The costs for the following infrastructure improvements must be paid for in the next several decades: ● ● ● ● ● ● ● Designing and constructing huge coal-ﬁred or nuclear generating systems; Constructing dams and reservoirs; Exploring and drilling for natural gas; Constructing an entire new infrastructure to receive, store, and distribute liqueﬁed natural gas (LNG); Laying new natural gas pipelines; Upgrading the North American electricity transmission grid; And more. Payment for these new facilities will be spread over very long periods of time – in some cases, as long as 50 years or more. Repaying the huge loans that will be needed for these utility infrastructure improvements will require public utility commissions to allow utilities to subtract the debt service from operating revenues. Otherwise, reasonable...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.