How can performance of state-owned utilities be improved?
Dr. Mark Jamison's presentation as the 11th Annual OOCUR Conference
November 6 - 8, 2013
How can performance of state-owned utilities be improved? The answers lie in aligning work inside and outside the utility. Addressing the 11th Annual Conference of the Organisation of Utility Regulators, PURC Director Mark Jamison explained that work inside the utility should be patterned after best practices in successful privately-owned companies, including focusing on financial success, strategic plans, aligning staff incentives with operator financial objectives, and taking down silos, all within the boundaries established by regulatory agencies. Regulators provide incentives by management audits, qualitative and quantitative benchmarking, and public disclosure of regulatory findings. Proper governance is critical to such best practices. Governance is the institutional structure and relationships, i.e., the outside work. A board of directors for the regulator and the regulatory agency itself -- not the operator -- are responsible for achieving sector policies. Operators should focus on how to be financially successful within the bounds of the regulatory system and overseen by their own boards of directors, which establish performance plans and hold the operator accountable for its financial performance.