Business Essentials for Utility Engineers

Book Preface

This is a book for utility engineers. Typical readers will have studied engineering in college, received an engineering degree, and somehow ended up pursuing a career within a utility or taken a job associated with utilities. Academic credentials for most of these readers will include advanced mathematics, probability, statistics, chemistry, physics, and materials science. Most will have further specialized in a specific area such as electrical engineering, mechanical engineering, or civil engineering. These types of readers are well-educated and intelligent, an assumption made by the author when presenting material, sometimes difficult material, throughout the book.

Utilities have many challenging engineering problems to be solved. New customers must be served. Old equipment must be maintained. New technologies must be assessed and adopted. To solve these challenges, engineers find themselves responsible for planning, engineering, system analysis, system design, equipment specification, maintenance management, operations, and a host of other functions.

Whatever their role, utility engineers make many decisions. Some of these decisions result from extensive and careful analyses. Others are made quickly during everyday activities. In virtually all cases, decisions have cost and other implications for the utility. Some options are cheap. Others options are expensive. Some options spend as little as possible now. Others options spend money now in order to save money later. Some options result in high safety margins. Other options are more risky. With so many choices, it is valuable for utility engineers to understand the criteria for deciding which decisions are best from a business perspective.

Typical businesses prefer engineering decisions that result in higher profits. A cheaper engineering solution may produce higher profits if a resulting lower price causes an increase in sales. It is also possible that a more expensive engineering solution will produce higher profits if the resulting higher quality product can command a premium price. In both cases, the business objective is clear: while acting legally and ethically, maximize profits whenever possible.

Do utilities want their engineers to maximize profits whenever possible? Stockholders of publicly traded utilities would answer with a resounding “yes.” However, the profits of utilities are essentially controlled by regulators, making profit maximization for utilities somewhat different than for other industries. There is a large body of literature on every imaginable business topic, but few address the application of these business topics to utilities in an effort to describe similarities, differences, and why these differences are important. Business Essentials for Utility Engineers hopefully fills this gap.

This book does not address a variety of topics that are typically covered in a business curriculum. Examples include strategy, marketing, organizational design, human resources, and business ethics. These topics are important in a general sense, but tend to be peripheral to most issues facing utility engineers. Their application to utilities is similar to other types of businesses, allowing the interested reader to effectively study these topics through general business publications that are not specific to utilities.