Electrical Utilities Essay ⋆ Environment Essay Examples ⋆ EssayEmpire

This Electrical Utilities Essay example is published for educational and informational purposes only. If you need a custom essay or research paper on this topic, please use our writing services. EssayEmpire.com offers reliable custom essay writing services that can help you to receive high grades and impress your professors with the quality of each essay or research paper you hand in.

Electrical utilities are organizations that are responsible for generating and marketing electricity to the public and government sectors. Because of the strategic importance of electricity to society and the economy and the fact that many geographically remote areas would not be profitable to supply, many electrical utilities are publicly owned. State-owned agencies have in some countries superceded private sector projects that were the first to be constructed, although in some cases the two sectors may share the burden of providing power. In some places, comparatively small, not-for-profit utilities can also exist to supplement the larger power grid and help in protecting the interests of rural households and communities. However, over the last few decades, many governments have been experimenting with different forms of privatization and deregulation, which in many cases have led to higher prices for consumers and high levels of profit for shareholders. In some cases, such as California, manipulation of the energy markets has led to massive levels of profit achieved through price gouging.

Three Functions

Electrical utilities deal with all or some of the three functions of the industry: generating electrical power, distribution of the power, and the collection of fees. In some cases, there may be brokers who buy and sell power but are not responsible for producing or distributing it. State-owned utilities customarily perform all of these activities, but may disaggregate for privatization or corporatization. Clearly, some parts of the process offer more opportunities for profitmaking and are more popular than others with potential shareholders. In any case, the privatized corporation is likely to be regulated by a designated public office, and legislation will generally have to ensure that its future behavior is appropriate. Regulatory areas of concern include the maintenance of the distribution system, the safety of the generating plant and its environmental impact, the secure provision of services, and the degree to which prices are permitted to vary.

Since a great deal of electricity generation is based on hydrocarbons, which may be sourced internationally and on an open market, it is inevitable that the price will vary. However, electric power is essential for safety and health institutions, whose abilities to pay are generally not flexible enough to accommodate significant price fluctuations. Consequently, these institutions benefit from regulations that cap prices and provide guarantees in terms of safety and security of delivery.

Despite some inefficiencies involved in distributing power over long distances, this option is still quite feasible in many cases. The development of hydroelectric power in Laos, for example, has been affected through both World Bank funding and extensive investment from Thailand, which is expected to produce a demand for power that is unlikely to occur domestically for many years. Cross-border provision of electricity poses a number of questions about taxation, responsibility for environmental impacts, and equity issues concerning the desirability of transferring valuable domestic resources overseas. These questions are customarily dealt with by using market or semi-market based transactions with negotiations involving government agencies and representatives.

Providing an appropriately fair and transparent regulatory regime is important in encouraging private-sector investment in renewable energy generation and the accompanying utilities. Incentives may also be necessary for this investment in cases where initial production is unlikely to be strongly profitable, at least not in the short term. The exact extent to which regulation is required remains uncertain: some countries, such as those that are part of the European Union, maintain heavy frameworks that are more rigorous than in many other countries. Harmonizing regulations across borders where institutional differences are influential remains a very complex task.

Bibliography:

Gerald Granderson, “Externalities, Efficiency, Regulation, and Productivity Growth in the S. Electric Utility Industry,” Journal of Productivity Analysis (v.26/3, 2006);
Leonard S. Hyman, Andrew S. Hyman, and Robert C. Hyman, America’s Electric Utilities: Past, Present and Future 8th ed. (Public Utilities Reports, 2005);
Eva Niesten, “Regulatory Institutions and Governance Transformations in Liberalising Electricity Industries,” Annals of Public and Cooperative Economics (v. 77/3, 2006).