Overview

The Northeast Utilities Company adopted an ambitious new competitive strategy in the mid-1980s, seeking to become the low-cost supplier in New England electric power markets bracing for deregulation. Given its high-cost nuclear facilities, doing so required a corporate turnaround. For a decade Northeast faced increasing public and employee resistance to cost cutting at its nuclear plants. Though management achieved many of its goals, curtailing outlays on nuclear operations meant high risk that the Nuclear Regulatory Commission would close the plants because of frequent, prolonged outages. This is just what happened in 1996. Did management's deliberate cost containment strategy take nuclear operations to an inevitable regulatory shutdown, and if so, why? Was it the pursuit of executive compensation tied to cost containment that caused undue risk of regulatory shutdown?Paul MacAvoy and Jean Rosenthal describe ten years of corporate performance preceding the shutdown, detailing aggressive executive decisions, mounting regulatory actions in response to increasingly severe operational failures, and - at the same time - overall improvement in corporate earnings, stock prices, and executive pay packages. They relate the complexities of managing declining nuclear plant operations under ever more pressing budgetary targets. Their discussion of the increasing risk of outages raises the issue of the tradeoff of profit and conservative management of hazard operations. All the more timely in light of the massive 2003 East Coast blackout, Corporate Profit and Nuclear Safety represents a powerful and cautionary commentary on industrial practices that goes to the heart of effective corporate governance.

Full Product Details

Author:   Paul W. MacAvoy ,  Jean W. Rosenthal
Publisher:   Princeton University Press
Imprint:   Princeton University Press
Dimensions:   Width: 15.20cm , Height: 1.80cm , Length: 23.50cm
Weight:   0.397kg
ISBN:  

9780691119946

ISBN 10:   0691119945
Pages:   176
Publication Date:   14 November 2004
Audience:   Professional and scholarly ,  College/higher education ,  Professional & Vocational ,  Tertiary & Higher Education
Format:   Hardback
Publisher's Status:   Active
Availability:   Manufactured on demand  
We will order this item for you from a manufactured on demand supplier.
Language:   English

Table of Contents

List of Figures vii List of Tables ix Preface xi Chapter One: Strategic Challenge at Northeast Utilities 1 An Overview of Strategy and Performance at Northeast Utilities 2 Chapter Two: Northeast's Competitive Strategy 7 Visions of a Changed Future 8 The Strategic Response 10 Financial Conditions at the Beginning of the New Competitive Strategy 13 Constraints: Price and Safety Regulation 18 Alternative Strategies: Other Electric Utilities Cope with Threats of Deregulation in the Mid-1980s 22 Comparative Nuclear Strategies: Pacific Gas and Electric 26 The Northeast Competitive Strategy in Context--Was It at Inception the Dominant Strategy? 27 Chapter Three: The Nuclear Power Context for the New Competitive Strategy 31 The Complexity of Nuclear Power Systems 31 Safety Regulation at the Nuclear Regulatory Commission 35 Self-Regulation in the Nuclear Industry 37 Safety Culture and Management Style 38 Cost Containment in the Context of Safety Regulation 41 A Conceptual Framework for Analyzing Responses to Regulation 45 Initial Results: The 1990-91 Millstone Nuclear Plant Shutdowns 48 Nuclear Regulatory Commission Early Warnings 53 The LRS Report and CT DPUC After-the-Fact Appraisal 57 Strategic Focus: Acquisition of Public Service of New Hampshire 57 Initial Results: Financial and Nuclear Plant Operating Performance 61 Chapter Four: Revisiting Competitive Strategy in the Mid-1990s 64 Northeast Strategy and the Competitive Threat 64 The PEP Process for Improving Nuclear Plant Performance 73 Operating Problems at Millstone in 1993 75 The Strategy of Northeast and the Board of Trustees 79 The Financial Success of Cost Containment 80 Strategy and Management Compensation 83 Another Look at Alternative Strategies 86 Chapter Five: Northeast Strategy and Regulatory Shutdown of the Millstone Plants 88 Failing Operations at Millstone 88 Shutdown at the Millstone Site 97 Increasing Public Concern 98 The Role of the Board in the Northeast Utilities Collapse 101 CODA: The End Game 105 Strategy as the Cause for Shutdown 108 Notes 113 Bibliography 135 Index 147

Reviews

This is an interesting, well-argued addition to the current discussion of corporate governance. Choice

Author Information

Paul W. MacAvoy is the Williams Brothers Professor of Management Studies at Yale University and former Dean of the Yale School of Management. The author of nineteen books, he served on President Ford's Council of Economic Advisors and was an economic advisor to George H. W. Bush before his vice-presidential election. Jean W. Rosenthal, a former manager at Pacific Gas and Electric, is Senior Olin Research Fellow at the Yale School of Management.

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