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Because a million things can be replaced. An electricity company can use private contractors (either individual or with lots of small regional companies) for maintenance, build, diagnosing, private power plants, ... and these can fail and be replaced independently, even if the power company as a whole cannot.

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Each one of those “independent” points that can potentially fail is just added dependencies that increases inefficiency due do increased oversight, adds more red tape, and slows down production.

A municipal electric company can use private contractors just the same. The difference is that the municipal electric company is accountable to the captive residents they serve, while a privately-owned monopoly escapes most accountability.

And the whole issue is that this accountability is generally used by a group of people that make it serve different issues. Municipalities use it like a way to raise taxes to do what they want to do (like a work program, a way to pay pensions for municipal workers, ...)

Of course a privately-owned one doesn't work either, because there's no competition.

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