Utility and Electrical
Utility and Electrical
An electric utility is a company in the electric power industry (often a public utility) that engages in electricity generation and distribution of electricity for sale generally in a regulated market. The electrical utility industry is a major provider of energy in most countries.
Electric utilities include investor owned, publicly owned, cooperatives, and nationalized entities. They may be engaged in all or only some aspects of the industry. Electricity markets are also considered electric utilities—these entities buy and sell electricity, acting as brokers, but usually do not own or operate generation, transmission, or distribution facilities. Utilities are regulated by local and national authorities.
Electric utilities are facing increasing demands including aging infrastructure, reliability, and regulation.
The executive compensation received by the executives in utility companies often receives the most scrutiny in the review of operating expenses. Just as regulated utilities and their governing bodies struggle to maintain a balance between keeping consumer costs reasonable and being profitable enough to attract investors, they must also compete with private companies for talented executives and then be able to retain those executives.
Regulated companies are less likely to use incentive-based remuneration in addition to base salaries. Executives in regulated electric utilities are less likely to be paid for their performance in bonuses or stock options. They are less likely to approve compensation policies that include incentive-based pay. The compensation for electric utility executives will be the lowest in regulated utilities that have an unfavorable regulatory environment. These companies have more political constraints than those in a favorable regulatory environment and are less likely to have a positive response to requests for rate increases.
Just as increased constraints from regulation drive compensation down for executives in electric utilities, deregulation has been shown to increase remuneration. The need to encourage risk-taking behavior in seeking new investment opportunities while keeping costs under control requires deregulated companies to offer performance-based incentives to their executives. It has been found that increased compensation is also more likely to attract executives experienced in working in competitive environments.
In the United States, the Energy Policy Act of 1992 removed previous barriers to wholesale competition in the electric utility industry. Currently 24 states allow for deregulated electric utilities: Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Virginia, Arizona, Arkansas, California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New Mexico, New York, and Washington D.C. As electric utility monopolies have been increasingly broken up into deregulated businesses, executive compensation has risen; particularly incentive compensation.
Electrical utility services are involved in the design, site location, construction, service, repair, and inspection of electrical utility facilities, substations, and transmission and distribution lines. There are several types of electrical utility services. Examples include rural utility service, underground utility locating service, electrical services, electrical contractor services and public electric utility service. Rural utility service provides reliable and affordable electricity for the well being of the rural residents. Underground utility locating service uses electromagnetic technology to locate underground facilities. An underground utility locating service has many different types of locators that have different frequencies and capability depending upon the type and location of the utility. Utility locating service points to underground utilities so that people digging in that area don’t damage them. Electrical services are capable of providing uninterrupted electrical and the low voltage services along with network, communications, and security solution to offices and homes by using an utility service body. Electrical contractor services perform all types of services from repairing an electrical outlet to replacing complete electrical services. A public electric utility service is provided by an organization which is subjected to government regulations to provide essential services such as electricity, water, and communication services to people. Electrical utility services comply with electrical and utilities safety rules to ensure safety of employees, customers, and the public.