Enviornmental Externalities In The Generation Of Electrical Power Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION

In this modern era of Globalization, the electrical industry is evolving and expanding robustly. A huge number of power plants are put into operations all around the world in order to cater the power needs of the economy. These power plants are fully equipped with high tech machineries as well as they use coal, oil, petroleum as well as gas in order to produce sufficient electricity. Most of the plants in many countries are operated using conventional means of operations which is subject to huge environmental externalities.

The pollution produced by these plants poses a significant negative effect on the environment of the economy, which further results in overall environmental deterioration. Most of the power plants in the economy do not comply with the environmental laws and regulations prevailing in the industry. The environmental deterioration has further caused many problems related to health as well as other problems, which has significantly affected the population of the economy.

Many countries have made their back breaking efforts in order to control the overall pollution of the economy as well as the countries have also posed strict restrictions on the power plants to implement precautionary measures in order to minimize the overall pollution of the plants. Moreover, the Government had also focused on maintaining effective technologies which could minimize the overall pollution of the economy.

In this modern era of Globalization, many technologies have been made in order to reduce the overall environmental pollution of the economy. The main reason that the power plants are reluctant in adopting such technologies is because of high costs associated with those technologies. The power plants are of the view that the adoption of new technologies will increase the overall costs of the company and thus, it will reduce the overall profitability of the company.

Furthermore, the environmental externalities could not be fully eliminated because the raw materials, type of fuel, used by such plants in order to generate the electricity are subject to environmental externalities. Moreover, there are no substitutes of the raw material used by power plants, which further decreases the ability of eliminating the environmental externalities associated with generation of electricity.

Thus, in order to reduce the overall environmental externalities produced from generation of electricity, people who were charged with governance had decided to use air and solar energy as raw materials or fuel type for generation of electricity. Furthermore, the environmental externalities produced from generation of electricity are also due to market failure in optimally using its scarce resources for the generation of electricity.

The Massachusetts Department of Public Utilities has been delegated with the responsibility of analyzing the reasons of environmental externalities as well as the department is also charged with a duty to assess the intensity of environmental pollution caused by the generation of electricity through power plants. The DPU is a unit that is responsible for regulating the rates as well as it is also responsible for setting rates of public utilities and common class carriers. The department consists of 130 chairs in which a commissioner is appointed by the Governor who is supposed to serve as a full time employee.

There is an Electric Power Division in the DPU, which is controlled by eight investor owned electric companies. These units are responsible to distribute electricity to its residential, commercial and industrial customers throughout the district in the electrical units. Moreover, most of these companies represent a retail industry because it is hard for the companies top represent a wholesale industry because of the high costs associated with it as well as the complex nature of these industries.

In addition to this, most of the suppliers from wholesale industry generate power by using a widespread variety of fuels as well as most of the whole sale industry uses coals as a resource for power generation as well as the industries use only conventional resources in order to generate the overall electricity for the commercial units.

The department is currently considering the most effective way to provide electricity to the end user in the most cost effective manner. The department is regulating rates in order to distribute the energy at a very low price as well as the total quality of the electricity distribution should be maintained. The department is considering the optimal quality services at comparatively low prices.Enviornmental Externalities In The Generation Of Electrical Power Case Solution

The department is mainly considered for a product and technology mix which could reduce the overall environmental externalities at a comparatively low cost. The department is concerned about the resource management plan as well as the department is also considered for the acquisition of new power sources or energy conservative programs, which in the latter area could support the management’s goal of reducing the overall environmental externalities........................

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