Management Challenges for the 21st Century
Chapter 16: Future Challenges Facing Utility Industry Managers
16. Future challenges facing utility industry managers The public utility industry is in the midst of one of the most trying periods it has faced since the Great Depression of the 1930s. Some of the key issues facing all segments of the industry include (1) the threat of terrorist attacks that could occur at any time and any place in the utility infrastructure; (2) rising operating costs with declining resource supplies; (3) increased demands for environmentally safe operations; and (4) industry restructuring that has brought about the unbundling of vertically integrated businesses. Investor-owned utilities have had to shift from the system of safe and secure regulatory control with ‘guaranteed’ returns on investment that has existed since 1935. While most have embraced the return to market pricing and global competition, others have found the transition fraught with diﬃculty. For an example of the problems facing the industry today, one need only review the failures, bankruptcies, and retrenchments in the industry that came about as a result of the problems in California in 2000 and 2001. For publicly owned utilities, the list of challenges also includes the drive toward smaller and more responsive government and competing needs for critical capital. This sector of the utility industry has seen privatization of large segments of municipal energy and water organizations. These trends have resulted in the outsourcing of many former public functions. Outsourcing is changing the very nature and rationale behind publicly owned utilities. Much of the infrastructure in both the publicly owned...
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