> Municipal utilities are also regulated but don't have investors to pay
Somebody has to pay.
Somebody has to pay.
A public utility has little incentive to be efficient as like you said, they are fine with 0% returns.
If a private utility gets a rate of $1.00 on $0.94 of expenses, it has an incentive to further reduce costs to increase the return, which reduces future rate growth (as higher rates won’t be approved).
Won't they, though? It seems like a rubberstamping process at this point.
So CA is a unique situation where the regulator effectively controls the public utility so calling it “private” is a bit of a stretch. More like a state controlled entity that trades on the stock market.
Rate increases absolutely aren’t rubber stamped, the CPUC routinely denies expenditures and the comedians rate increases.
But speaking more of the hypothetical, if set up correctly a regulated private utility could be incentivized to reduce costs to capture a higher profit at the same rate.
A publicly owned utility running at 0% returns wouldn't be able to pay interest on the debt it would have to issue to make capital investments.
PG&E is paying 2.4 billion dollars a year in interest expense (at least in 2023), so it's fair to wonder if that's really any better.