Public Utilities
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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.
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Chapter 12: Challenges in Public Utility Governance

David E. McNabb


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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