Local distribution electricity utilities
("LDCs") have been a source of stable
and predictable income for their municipal owners. That is in large
measure a result of the fact that LDCs are providing a monopoly
service overseen by a regulator charged with the obligation, among
other things, to ensure the stability of the LDCs.
One result of these circumstances is that municipalities have in
many cases played a limited role in the governance of their LDCs.
In addition, the directors of LDCs, including in some cases members
of municipal councils, have likewise played a limited role in
governance. They have elected, instead, to rely largely, if not
entirely on the expertise of management. This is in part because of
the complexity of the electricity distribution business, in part
because the fact of regulatory oversight, and in part because the
range of business decisions was limited by the absence of
competitive pressures.
