Utility Firms Research Articles

Unraveling the Hidden Costs: How Cable Theft and Vandalism Fuel Soaring Energy Tariffs in Emerging Economies

Escalating utility costs and challenging financial circumstances make it increasingly difficult for consumers to afford essential services. This financial strain also spills over into the workplace, where employees resort to pilfering company assets, resulting in significant annual losses for these utility firms. Our study aims to identify the organizational factors and individual personality traits that motivate employees to engage in cable theft and vandalism, subsequently driving up tariffs. Utilizing the frameworks of the Reasoned Action Theory (TRA) and the Theory of Planned Behavior (TPB), we seek to elucidate the underlying motivations for such theft and destruction of property. Factors such as an unsatisfactory work environment, perceived unfair treatment by management, subpar wages, and easy opportunities for theft are identified as key motivators. To effectively mitigate these issues, targeted policy measures and strategies need to be implemented to influence employee attitudes and perceptions, thereby reducing incidents of theft and vandalism.

Switch to pollution control bonds, else carbon risk will switch us: Evidence from the U.S. electric utility firms

This study explores the implications and effectiveness of pollution control bonds (PCBs) in reducing carbon risk, focusing on a sample of 242 U S. electric utility firms from 2012 to 2022. The research investigates the association of PCB issuances with (i) absolute (unscaled) carbon emissions levels and their three scopes; and (ii) carbon emissions intensity and its three scopes. Using quantile regressions covering the 5th, 25th, 50th, 75th, and 90th quantiles, along with the Propensity Score Matching (PSM) methodology (where the treatment group includes firms using PCBs and the control group comprises firms that do not opt for PCBs), the findings show a significant reduction in carbon emissions due to PCB issuance. Substantial differences were observed between the treatment group and the control group across various quantiles of carbon emissions, particularly for companies with medium to high carbon footprints, both in terms of overall CO2 emissions and scope 2 CO2 emissions. Moreover, disparities between the two groups were notable across all quantiles of scope 1 CO2 emissions. Additionally, among the companies using PCBs, those with lower risk profiles exhibited a smaller carbon footprint, measured by scope 3 CO2 emissions, in comparison to their counterparts. Furthermore, the study highlights a more pronounced impact of PCBs issuance during the second phase of the Kyoto Protocol and the commitment period of the Paris Agreement. The results remain robust when alternative measures of carbon risk are applied. These findings carry significant implications for municipal and financing authorities, as well as investors within the U.S. electric utility industry. This research contributes novel insights to the field of electric utility management.

Women on Board and ESG Performance: Insights from the Italian Utilities Sector

The purpose of this paper is to investigate the relationship between gender diversity and environmental, social and governance (ESG) performance in the Italian utilities sector. The study examines whether the presence of women on the board of directors (BoD) is related to ESG dimensions. We analyzed a sample of 482 utility companies for the period 2018-2022 and we developed an econometric model applying unbalanced panel regression data with firm fixed effects and controls per year. Within a multivariate regression model, the authors considered the ESG score provided by Refinitiv Eikon to test the research hypotheses. Findings show that the presence of women on board of directors improves ESG performance when a critical mass of female board members (at least three) is reached. A critical threshold of female directors also positively influences the scoring of environmental and social pillars. From a managerial perspective this study draws attention to BoD composition encouraging utility companies to define internal corporate governance mechanisms thoroughly. The overall findings support managers, policy makers and regulators on how to improve ESG performance through gender diversity on BoD. This paper offers an in-depth examination of the ESG practices of utility firms, and it attempts to bridge the gap in prior literature on the determinants of ESG performance in the Italian utilities sector. This study is the first that investigates the relationship between board gender diversity and ESG performance in such a context exploring how a critical mass of women on BoD affects ESG dimensions.

Power consumption prediction for electric vehicle charging stations and forecasting income

Electric vehicles (EVs) are the future of the automobile industry, as they produce zero emissions and address environmental and health concerns caused by traditional fuel-poared vehicles. As more people shift towards EVs, the demand for power consumption forecasting is increasing to manage the charging stations effectively. Predicting power consumption can help optimize operations, prevent grid overloading, and power outages, and assist companies in estimating the number of charging stations required to meet demand. The paper uses three time series models to predict the electricity demand for charging stations, and the SARIMA (Seasonal Auto Regressive Integrated Moving Average) model outperforms the ARMA (Auto Regressive Moving Average) and ARIMA (Auto Regressive Integrated Moving Average) models, with the least RMSE (Root Mean Squared Error), MAE (Mean Absolute Error) and MAPE (Mean Absolute Percentage Error) scores in forecasting power demand and revenue. The data used for validation consists of charging activities over a four-year period from public charging outlets in Colorado, six months of charging data from ChargeMOD's public charging terminals in Kerala, India. Power usage is also forecasted based on wheels of vehicles, and finally, a plan subscription data from the same source is utilized to anticipate income, that helps companies develop pricing strategies to maximize profits while remaining competitive. Utility firms and charging networks may use accurate power consumption forecasts for a variety of purposes, such as power scheduling and determining the expected energy requirements for charging stations. Ultimately, precise power consumption forecasting can assist in the effective planning and design of EV charging infrastructure. The main aim of this study is to create a good time series model which can estimate the electric vehicle charging stations usage of power and verify if the firm has a good income along with some accuracy measures. The results show that SARIMA model plays a vital role in providing us with accurate information. According to the data and study here, four wheelers use more power than two and three wheelers. Also, DC charging facility uses more electricity than AC charging stations. These results can be used to determine the cost to operate the EVs and its subscriptions.

Short-selling constraints and firm-level climate change exposure: Evidence from utility firms

This study investigates the impact of short selling on firm-level climate change exposure in US utility firms during a period when short selling constraints were exogenously suspended. We find evidence that increasing short selling is associated with greater firm-level climate change exposure.

Corporate social responsibility and investor relationship management

AbstractFollowing the Fukushima Daiichi nuclear disaster, utilities firms increase their commitments to corporate social responsibility (CSR), emphasizing on addressing environmental concerns over non‐environmental ones. The intensified focus on CSR is especially significant in utilities firms with substantial institutional ownerships. Concurrent to the increase in CSR, utilities firms also exhibit a decline in advertising expenditures, a trend more pronounced in firms facing more financial constraints. Our findings suggest that utilities firms substitute CSR for advertising following the Fukushima accident. This shift appears driven by investors’ heightened focus on environmental issues in the aftermath of the accident.

ESG and the performance of energy and utility portfolios: evidence from Australia

PurposeThis study aims to establish the effect of environmental, social and governance (ESG) practices on Australian energy and utility investment performance.Design/methodology/approachConventional and ESG-rated portfolios are constructed using monthly returns and ESG scores of S&P/ASX 300 listed energy and utility firms from 2014 to 2022. Portfolio performance is estimated using a four-factor regression model, controlling for any economic shocks associated with the COVID-19 pandemic.FindingsThe findings show that the lower the ESG score associated with the overall ESG and environmental portfolios, the greater the performance compared to the market (but not the conventional and other ESG portfolios). High ESG scores do not appear to influence the performance of the energy and utility portfolios, which contrasts expectations that the uptake of ESG should deliver superior risk-return outcomes for investors. The findings also indicate that a contrarian investment approach may be a reasonable performance indicator for high-rated ESG portfolios. ESG practices did not impact portfolio performance during the COVID-19 pandemic.Originality/valueThis research has contributed to the literature by offering ESG investment insights for policymakers, regulators, fund managers and investors. Consistent with the agency perspective on ESG practices and efficient market hypothesis, the evidence implies that, regardless of ESG scores (either high or low), investors should consider investing passively in diversified energy and utility portfolios or low-cost index fund equivalents.

The impact of corporate digital transformation on firms’ performance in utilities sector

In the evolving business landscape, utility firms are undergoing transformative digital changes. The purpose of this study is to examine the unexplored link between utility firms' digital transformation and performance, by utilizing unique data from Chinese listed utilities. Empirical findings show a positive correlation between digital transformation and enhanced performance, with financial constraints and environmental performance as identified mechanisms. The research enriches understanding of digital transformation's economic consequences, providing practical insights for implementation, especially for environmentally conscious firms. Considering textual analysis and sample size limitations, future studies could assess utility firms' digital transformation across diverse economies with a more thorough evaluation of a firm's level of digital transformation.

Does the sun ‘shine’ on utility firms? Evidence from pollution control bonds and overinvestment relationship

PurposeThis study aims to investigate the impact of pollution control bonds (PCBs) on overinvestment within utility firms.Design/methodology/approachThis empirical study analyzes a data set comprising 215 US energy firms observed from 2011 to 2021, using the ordinary least square regression with standard errors adjusted for firm-level clustering.FindingsThe study reveals a negative relationship between PCBs and overinvestment, indicating that PCBs are an effective tool in curbing excessive investment. Additionally, it demonstrates that chief executive officer (CEO) overconfidence diminishes the influence of PCBs on overinvestment. These findings remain robust across various metrics for measuring overinvestment and CEO overconfidence, as well as when alternative estimation methods are used. These results align with insights derived from agency theory and upper echelon theories.Research limitations/implicationsRegulators are encouraged to actively promote the use of PCBs as a financing tool for environmentally focused initiatives. To achieve this, regulatory bodies should enhance their presence within the utility sector, particularly in regions grappling with higher pollution levels. This requires the implementation of strategic policies and regulatory frameworks aimed at mitigating excessive investments. Simultaneously, policymakers should take proactive measures to introduce financial instruments designed to optimize investment efficiency, thus facilitating eco-friendly projects.Originality/valueTo the best of the authors’ knowledge, this paper holds the distinction of being the first to examine the impact of a specific type of green bond, namely, PCBs, on overinvestment. Furthermore, it contributes to the literature on personality traits, particularly within the context of the upper echelon theory, by investigating the moderating influence of CEO overconfidence.

Pollution control bonds and environmental performance in energy utility firms: is there an incantation effect?

PurposeThis study aims to examine the effects of green financing through pollution control bonds (PCBs) on environmental performance.Design/methodology/approachThis study is based on a panel of 189 US energy utility firms observed over the period, 2011–2021 ; this study applies Generalized Method of Moments regressions.FindingsThis study found that PCBs positively affect environmental performance (aggregate measure, greenhouse emissions, waste landfill, waste incineration and waste recycling). These findings remain robust when this study considers alternative measures of PCBs and environmental performance, the quantile regression method and some firms’ attributes such as financial performance and firm age.Practical implicationsThe results indicate that US energy utility firms have to adopt more PCBs. This study helps researchers, practitioners, shareholders, bondholders, equity analysts and local authorities such as the California Pollution Control Financing Authority, municipalities and investors understand PCBs issuance, usefulness and relevance.Originality/valueTo the best of the authors’ knowledge, this study is the first to explore the effectiveness of PCBs in reducing pollution.

Flattening Energy-Consumption Curves by Monthly Constrained Direct Load Control Contracts

California Utility Firm Implements Innovative Model, Reducing Costs by 4% A California utility firm has successfully implemented a pioneering model to balance electricity demand and supply while minimizing costs. By utilizing direct load control contracts (DLCCs), the firm can reduce energy consumption during peak hours. Researchers developed an integer stochastic dynamic optimization problem that considers monthly and annual constraints, allowing for effective execution of DLCCs. Incorporating a “reduce-to-threshold” policy to flatten energy-consumption curves during high demand, the model was verified using real data from the California Independent System Operator. When implemented, the utility firm achieved an impressive cost reduction of approximately 4%. Sensitivity analysis was conducted to enhance customer experience and improve DLCC contract features. The success of this innovative model highlights the potential of DLCCs and advanced optimization techniques in the energy sector, offering a blueprint for other utility companies seeking to optimize grid stability and reduce costs.

A technique to boost Reliability and Efficiency of a Radial Distribution Network by considering the effect of Protective Devices and System Restructuring

The capability to supply reliable and efficient electric power is essential for any healthy power distribution network. Achieving these desirable network performance criteria has always been a concern for electric power utility firms. A solution to resolving this concern is demonstrated in this paper with the aid of an operational technique, known as Distribution System Restructuring. In this technique, the topological arrangement of the flow of branch currents is varied by operating the available network switches in such a way that the desired objective is fulfilled keeping all the nodes energized in a radial configuration. The method exhibits how without further infrastructural investments the reliability and efficiency of the system can be improved at various load levels. This paper also showcases the effect of protective devices on system reliability. A detailed analysis is provided to assess the possible interruption duration caused due to a fault. This assessment is pivotal for reliability evaluation. The proposed methodology benefits from a novel optimization technique named Differential Evolution infused Krill Herd Sine Cosine Algorithm. The methodology is applied to the IEEE 33-node and the IEEE 69-node distribution network. The numerical results so obtained prove its potency to solve the problem.

Investigating how board gender diversity affects environmental, social and governance performance: Evidence from the utilities sector

This study investigates the effect of board gender diversity (BGD) on environmental, social and governance (ESG) performance. This study considers the utilities sector as it has contributed more to Agenda 2030 than the non-environmental sectors. Specifically, the sample includes 53 utility firms from 15 European Union countries. The data is extracted from the Bloomberg database from 2011 to 2021. We apply the ordinary least squares technique and find that BGD positively influences ESG performance; this effect becomes stronger in the presence of at least three female board members. This study provides implications for practitioners and stakeholders of utility firms.

Practical Approach to Underground Distribution Power Cable Fleet Management

With the growing requirements imposed by regulatory authorities, grid operators and power utilities firms are confronted with the challenging task of ensuring the reliability, safety, and resilience of distribution networks amid aging asset infrastructure and a lack of resources. Over the past 15 years, the health index (HI)-based analysis has become an increasingly popular asset management tool for several power utilities. This strongly focuses on HI-based analysis to consider not only factors such as the cable vintage, type, and operating conditions, but also maintenance testing data. In this regard, the best industry practices for cable maintenance testing, including VLF Tan-Delta, partial discharge (PD), and time domain reflectometry (TDR), are outlined. Moreover, online tests, such as infrared thermography, ultrasonic PD scan, and temperature monitoring, are discussed. This paper also summarizes the classic asset management strategies for underground (UG) distribution power cables. The paper offers a practical approach for cable fleet management based on authors’ experience dealing with distribution power utility cable management for North American power utilities firms in the past 10 years. The proposed approach ensures reliable cable management at the lowest total life cycle cost. The topic of fleet management for UG power cables considering various condition parameters and an overall risk assessment is outlined. The fleet management guideline of UG power cables covers both cables and their accessories, such as terminations and joints. The main contributions of the paper are to: (1) determine the key parameters and testing factors for condition assessment of cables; (2) offer a practical approach to cable management that is not only based on technical issues, but also considers risk and impact costs, such as financial impact, reliability impact, etc.; and (3) propose a methodology for translating the HI/calculated risks into GIS, making it possible to identify major degradation patterns for fleet assessment. Considering budget and resource limitations around testing UG cable installations, this paper aims to assist asset managers, engineers, and asset owners in developing an effective cable fleet management strategy.

Relational Marketing Promotes Sustainable Consumption Behavior in Renewable Energy Production

Until recently, the prominent stage of electricity generation has been carried out by utility firms; however, the general landscape of power generation in the world is changing. The availability of low-cost photovoltaic panels is encouraging households to become local producers themselves and sell energy to the grid at a micro-scale. Therefore, the development of renewable energy production is increasing the domain of the energy market from pure product delivery to a market of mixed services and goods delivery, with new players entering the value chain. For this reason, utility firms need to rethink their marketing activities, their interface and interaction with the consumer, the infrastructure they need for the flow of their production to the consumer, and the architecture of their value proposition. Faced with the growing market for renewable energy services, this study investigates how utility firms should target marketing activities to take advantage of business opportunities in the newer networks of competitive coalitions. The results of the study carried out suggest that firms need to strengthen their competitiveness and capability in internal marketing, their core competence in technological development and personnel management, and their external marketing promotions. By doing so, firms will be able to compete with established technologies and generate revenue by treating the disruptive and innovative technologies of the distributed generation as the gateway to the service market, and prospect the S-D-dominant logic of marketing in their activities. Moving beyond the traditional electricity delivery culture of utility firms could open up new opportunities for growth and expansion to attract a greater number of consumers, as is done today in similar high-tech industries.

The Financial Performance of Newly Launched Chinese Infrastructure REITs

This paper explores the financial performance of the first group of nine infrastructure real estate investment trusts (REITs) that went public in mainland China in June 2021. Under the short-term event study framework, this research compares the abnormal returns and correlations of nine Chinese REITs with three groups of competitors (i.e., 49 quasi-REITs, 54 infrastructure asset-backed securities (ABSs), and 132 Wind utility firms). Three approaches are used to evaluate the performance of REITs: Risk-return indicators (e.g., Sharpe ratios and Jensen’s alphas) and raw returns measure the preliminary results, and panel data analyses capture the relative advantages of REITs over their competitors within the infrastructure industry. REITs are small-cap firms with the largest Sharpe ratios and greater diversification potential than the ABSs. Despite beating the market, they did not start to trade with a premium until the first month after their initial public offerings (IPOs). Post-event annualized abnormal returns are more than 15% against the ABSs and close to zero against Wind utility firms after controlling for key financial variables, and three mechanisms behind the REIT IPOs (i.e., asset type, taxation, and liquidity) are verified. Therefore, REITs outperform quasi-REITs and infrastructure ABSs as well as the market proxies, and their launch brought out favorable outcomes.

The Thirst for Power: The Impacts of Water Availability on Electricity Generation in China

Economic development under restricted resource availability has become a complex challenge for both developing and well-established economies. To maintain a sustainable electricity supply and mitigate the impact of water shortage on economic development, it is therefore important to understand how utility firms respond to the change in water availability and unpacks the underlying mechanisms of power outage. By pairing plant-level information with the fine-scale grid monthly meteorological data, we find significant plant-level technology substitution in response to water scarcity: a one-standard-deviation decrease in water availability causes an approximate 205 GWh decline per hydro power plant, a 145 GWh increase per nuclear plant, and a 28 GWh increase per coal-fired plant. This water-induced technology substitution takes place within the grid, and we do not identify cross-grid adjustment. Our estimation shows that the technology substitution is associated with a hidden increase in carbon emission up to 32000 tons per year by plant, resulting in an additional cost of 0.18 million USD. Water scarcity slows down the transition towards renewable energy.

On the Effectiveness of Smart Metering Technology Adoption: Evidence from the National Rollout in the United Kingdom

In response to the burgeoning threats of climate change to humanity, numerous governments, such as those of the United States and most European countries, have launched rollout programs for the distribution of smart metering technology (SMT). Despite this notable recent investment, questions of whether and why SMT adoption facilitates the reduction of households’ energy demands remain relatively unexplored. Building on cognitive dissonance theory, we propose a research model for SMT adoption, residential energy-saving behaviors, and moderating factors. We then empirically test the model using a rich household dataset from the United Kingdom between 2012 and 2016. Our results show that SMT adoption is positively associated with energy-saving behaviors, while energysaving motivations substantially moderate this association—a lower level of concern about saving energy / a higher level of concern about climate change amplifies this effect. Importantly, we find that SMT usage positively moderates this relationship, but this marginal gain decreases in technology usage intensity. Our findings contribute to the information systems literature by showing a consequence of new technology adoption along with the role of cognitive dissonance in promoting intended objectives and identifying potential moderating effects. We discuss actionable insights for policymakers and utility firms.

Diffusion Patterns in Small vs Large Capital Markets – the Case of Value-Based Management

We empirically study the diffusion of value-based management (VBM) in small capital markets. Specifically, we analyse the factors that influence VBM adoption in Danish-listed firms. Based on a hand-collected data set covering 665 firm years from 2002 to 2010, we find that the same factors influence the diffusion of VBM in both large and small capital markets. Specifically, we find that large firms with a higher percentage of institutional ownership and with a CEO whose education is business-related are more likely to adopt VBM. Additionally, the control variables reveal a significant positive correlation between VBM adoption and leverage, capital intensity, liquidity, and the characteristics of top executives. Furthermore, we find that manufacturing and utility firms are more likely to adopt VBM than service or trade firms. Contrary to the mainstream opinion, we contribute to the literature that findings from large capital markets appear to be transferable to firms in small capital markets.

The Effects of EVC Plus on Firm’s Sales Performance

This paper analyzed how EVC Plus affects the sales performance of local firms using coded data from HORMUUD Telecom (2017-2020) for privacy purposes and survey questionnaires extracted from local universities. Five clusters were chosen as a sample, universities, grocery supermarkets, pharmacies, utility companies, and government agencies. The study uses an autoregressive model and other techniques. The findings reveal that the adoption of EVC plus has a strong positive and significant correlation with a firm’s performance. The highest correlation coefficient is found in utility firms, followed by the universities, where almost all transactions are made in EVC Plus mobile money transfers.