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Corporate Profit and Nuclear Safety : Strategy at Northeast Utilities in the 1990s - Paul W. MacAvoy

Corporate Profit and Nuclear Safety

Strategy at Northeast Utilities in the 1990s

Hardcover

Published: 14th November 2004
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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.

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

List of Figuresp. vii
List of Tablesp. ix
Prefacep. xi
Strategic Challenge at Northeast Utilitiesp. 1
An Overview of Strategy and Performance at Northeast Utilitiesp. 2
Northeast's Competitive Strategyp. 7
Visions of a Changed Futurep. 8
The Strategic Responsep. 10
Financial Conditions at the Beginning of the New Competitive Strategyp. 13
Constraints: Price and Safety Regulationp. 18
Alternative Strategies: Other Electric Utilities Cope with Threats of Deregulation in the Mid-1980sp. 22
Comparative Nuclear Strategies: Pacific Gas and Electricp. 26
The Northeast Competitive Strategy in Context-Was It at Inception the Dominant Strategy?p. 27
The Nuclear Power Context for the New Competitive Strategyp. 31
The Complexity of Nuclear Power Systemsp. 31
Safety Regulation at the Nuclear Regulatory Commissionp. 35
Self-Regulation in the Nuclear Industryp. 37
Safety Culture and "Management Style"p. 38
Cost Containment in the Context of Safety Regulationp. 41
A Conceptual Framework for Analyzing Responses to Regulationp. 45
Initial Results: The 1990-91 Millstone Nuclear Plant Shutdownsp. 48
Nuclear Regulatory Commission Early Warningsp. 53
The LRS Report and CT DPUC After-the-Fact Appraisalp. 57
Strategic Focus: Acquisition of Public Service of New Hampshirep. 57
Initial Results: Financial and Nuclear Plant Operating Performancep. 61
Revisiting Competitive Strategy in the Mid-1990sp. 64
Northeast Strategy and the Competitive Threatp. 64
The PEP Process for Improving Nuclear Plant Performancep. 73
Operating Problems at Millstone in 1993p. 75
The Strategy of Northeast and the Board of Trusteesp. 79
The Financial Success of Cost Containmentp. 80
Strategy and Management Compensationp. 83
Another Look at Alternative Strategiesp. 86
Northeast Strategy and Regulatory Shutdown of the Millstone Plantsp. 88
Failing Operations at Millstonep. 88
Shutdown at the Millstone Sitep. 97
Increasing Public Concernp. 98
The Role of the Board in the Northeast Utilities Collapsep. 101
CODA: The End Gamep. 105
Strategy as the Cause for Shutdownp. 108
Notesp. 113
Bibliographyp. 135
Indexp. 147
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780691119946
ISBN-10: 0691119945
Audience: Tertiary; University or College
Format: Hardcover
Language: English
Number Of Pages: 176
Published: 14th November 2004
Publisher: Princeton University Press
Country of Publication: US
Dimensions (cm): 23.5 x 15.2  x 1.83
Weight (kg): 0.4