Business management practices in the power industry: Decision making in a market economy
- Fieldstone Private Capital Group, New York, NY (United States)
- Fieldstone Private Capital Group, Prague (Czechoslovakia)
Management of a free market power industry, or managing the transition from a planned economy to a free market one, is driven by a fundamental economic premise - it is unrealistic (and economically unsound) to try to shelter end users (manufacturers or otherwise) from the true cost of energy: (i) energy prices are a function of fuel inputs (ii) fuel inputs are world priced (iii) end users must pay prices based on true costs Trying to counter any of these dictates will cause economic inefficiencies and misallocations. Managers of energy production in a free market economy must therefore learn to acquire data, and learn to extrapolate. As information is never complete, or perfect, managers must learn to consider contingencies, alternatives and options. In a free market economy, the decision to build a power facility is not controlled simply by the recognition of a perceived need for more power in an area. Because survival in a free market economy requires making a profit, as part for the decision process managers must: (i) talk to their customers to determine power needs into the future (ii) talk to their input suppliers, and arrange contracts (iii) make sure that there is a spread between cost and revenue As stated this is a simple recipe, but is difficult in practice. To perform any forecasting, managers must acquire control over cost, so as to have a base from which to judge the continued profitability or potential profitability, of any current activity or future ventures. It should be noted that planning for the future is difficult at any time but even more so when moving through an era where in the entire economy is undergoing systemic changes. Historic customer base, and historic supply arrangements, may not mean much. Therefore, managers must keep acquiring information, and updating forecasts.
- Research Organization:
- North Dakota Univ., Grand Forks, ND (United States)
- OSTI ID:
- 374601
- Report Number(s):
- DOE/MC/30097-5161-Pt.2; CONF-9410458-Pt.2; ON: DE96011553; TRN: 96:004422-0027
- Resource Relation:
- Conference: 2. international conference on energy and environment: transitions in East Central Europe, Prague (Czech Republic), 31 Oct - 1 Nov 1994; Other Information: PBD: Dec 1995; Related Information: Is Part Of Advanced power assessment for Czech lignite, Task 3.6, Part 2; Sondreal, E.A.; Mann, M.D.; Weber, G.W.; Young, B.C.; PB: 774 p.
- Country of Publication:
- United States
- Language:
- English
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