Tag Archives: eliminating uncertainty

Fixing the illusion of certainty in Georgia Power’s decision-making

Why is it so hard to get a company like Georgia Power or The Southern Company to get on with solar and wind power for clean energy, for national energy independence, and, most importantly to such corporations, for their own profit? Why instead do they keep investing in coal and natural gas and wasting our tax and customer dollars on nuclear financial boondoggles? Why did Cobb EMC back new coal plants until they had their nose rubbed in national shame about corruption and do nothing about solar until their shareholders revolted and changed a majority of their board? We don’t even need to wait for that forensic audit the new Cobb EMC board wants to get the big picture. Such companies consider what they’re used to to be low risk, and anything new to be risky. Why are they so stodgy, and how do we change that?

These companies have many decades of experience with coal and natural gas, so they consider them less financially risky. (Details like neighbors dying disproportionately from cancer cost a little bit to buy up property, but that’s nothing compared to readily predictable profits.) Even nuclear such companies consider not risky to them, since they’ve got the federal government and their own customers guaranteeing all the financial risk through Construction Work in Progress charges on their bills for power they’re not even receiving from the new nukes and agreement from Georgia PSC that cost overruns like those caused by concrete sinking into the dirt can be passed on to the customers.

Neal Stephenson wrote for World Policy Journal September 2011, Innovation Starvation,

The illusion of eliminating uncertainty from corporate decision-making is not merely a question of management style or personal preference. In the legal environment that has developed around publicly traded corporations, managers are strongly discouraged from shouldering any risks that they know about—or, in the opinion of some future jury, should have known about—even if they have a hunch that the gamble might pay off in the long run. There is no such thing as “long run” in industries driven by the next quarterly report. The possibility of some innovation making money is just that—a mere possibility that will not have time to materialize before the subpoenas from minority shareholder lawsuits begin to roll in.

But if the old ways turn out to be suddenly risky, change can come. Funny how Cobb EMC changed its tune after subpeonas started raining down for its former CEO Dwight Brown. Sure, he got off on a technicality, but it turns out Cobb EMC shareholders didn’t like Continue reading