UMC Strategic Planning and Governance 3 — Questions and Answers
Question 1: Under which condition would a utility most likely invoke an emergency strategic plan revision?
- A routine annual budget review
- A major regulatory mandate with a short compliance deadline that conflicts with current strategy (Correct answer)
- The retirement of one department manager
- A minor update to billing software
Correct answer: A major regulatory mandate with a short compliance deadline that conflicts with current strategy
A significant regulatory mandate with a short compliance window can require immediate strategic realignment because it imposes binding external constraints on utility operations.
Question 2: Which concept describes the practice of setting utility rates through an independent, quasi-judicial process with public testimony?
- Executive pricing authority
- Rate case proceeding before a regulatory commission (Correct answer)
- Board-only closed-session approval
- Cost-plus contractor bidding
Correct answer: Rate case proceeding before a regulatory commission
A rate case proceeding before a regulatory commission is the formal legal process where utilities present cost-of-service evidence and the public can testify before rates are set.
Question 3: A utility's strategic plan horizon is typically how long?
- 6 months to 1 year
- 3 to 5 years (Correct answer)
- 10 to 20 years
- 50 years or more
Correct answer: 3 to 5 years
Most utility strategic plans span 3 to 5 years, balancing near-term operational realities with longer-term directional goals, while master plans may extend much further.
Question 4: What does 'delegated authority' mean in utility governance?
- Outsourcing all utility operations to a private contractor
- The board formally authorizing management to make specified decisions without board approval for each (Correct answer)
- Transferring ownership of utility assets to another entity
- Allowing customers to vote on rate increases
Correct answer: The board formally authorizing management to make specified decisions without board approval for each
Delegated authority is a board policy that defines what decisions management can make autonomously, setting clear boundaries to enable efficient operations without requiring board approval for every action.
Question 5: In utility strategic planning, 'scenario planning' is best used to:
- Schedule preventive maintenance activities
- Explore how the utility would perform under multiple plausible future conditions (Correct answer)
- Calculate exact 10-year revenue projections
- Determine optimal crew staffing for emergency response
Correct answer: Explore how the utility would perform under multiple plausible future conditions
Scenario planning prepares utilities for multiple plausible futures rather than a single forecast, helping leadership make robust decisions under uncertainty.
Question 6: Which governance document typically defines the scope of authority and composition requirements for a utility's governing board?
- Operations and maintenance manual
- Enabling legislation or utility charter/bylaws (Correct answer)
- Annual financial audit report
- Capital improvement program
Correct answer: Enabling legislation or utility charter/bylaws
The enabling legislation, charter, or bylaws legally establish the board's authority, member qualifications, composition, and decision-making procedures.
Question 7: A utility manager notices that capital projects are consistently over budget. Which strategic governance action is most appropriate?
- Eliminate the capital improvement program
- Implement a project oversight and reporting framework with milestone reviews and variance analysis (Correct answer)
- Reduce the number of board meetings
- Transfer all capital projects to an outside engineering firm
Correct answer: Implement a project oversight and reporting framework with milestone reviews and variance analysis
A project oversight framework with milestone reviews and variance analysis creates accountability and early-warning mechanisms to identify and correct budget overruns before they become critical.
UMC Strategic Planning and Governance 3
Under which condition would a utility most likely invoke an emergency strategic plan revision?