Mid-Atlantic Power Corporation (A2)

14 Pages Posted: 21 Oct 2008

See all articles by R. Edward Freeman

R. Edward Freeman

University of Virginia - Darden School of Business

Abstract

The purpose of this case is to explore the strategic options that open in an industry under conditions of deregulation. Mid-Atlantic Power Corporation is a traditional electric utility and is uncertain if its strategic course is a new, more competitive, business environment.

Excerpt

UVA-E-0140

Mid-Atlantic Power Corporation (A2)

It was January 29, 1996, the day before the presentation, and Hesha Dunham was in a panic. He angrily threw the pickle he had been eating at the trashcan. Dunham was wondering why he had promised his boss, Harsh Judgment, a full review of regulation's impact on Mid-Atlantic Power. The review was required in time for the quarterly strategic planning meeting. It was too late to worry now. While Dunham was confident that he had completed a rigorous and wide-ranging analysis, he was unsure what to present as a recommendation. There were many options, including splitting the business, focusing on the customer, diversifying, or investing overseas. He had run all the scenarios and looked at all the sensitivities, but he knew that Judgment would want an answer—an answer that Dunham could defend.

Mid-Atlantic Power Corporation

Mid-Atlantic Power Corporation was incorporated in 1902, in North Carolina. Its principal office was in Greensboro, North Carolina. It was a wholly owned subsidiary of Mid-Atlantic Resources, Inc., which was a North Carolina corporation. Mid-Atlantic Power was a regulated public utility engaged in the generation, transmission, distribution, and sale of electricity within a 50,000 square-mile area in North Carolina and the southwestern corner of Virginia. It sold electricity to retail customers such as rural electric cooperatives and municipalities as well as to its own commercial and residential clients.

The company was licensed by the North Carolina Utilities Commission for service in the territory serving at the retail level. Substantially, all of the company's electric costs were subject to recovery at a rate agreed upon by the North Carolina Utilities Commission. Currently, the commission recommended a rate of return on equity of 10.5 to 11.5 percent. Summaries of the latest financial statements are shown in Exhibits 1 and 2.

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Keywords: strategic thinking

Suggested Citation

Freeman, R. Edward, Mid-Atlantic Power Corporation (A2). Darden Case No. UVA-E-0140, Available at SSRN: https://ssrn.com/abstract=908409 or http://dx.doi.org/10.2139/ssrn.908409

R. Edward Freeman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-924-0935 (Phone)
804-924-6378 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/freeman.htm

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