Investor-owned utilities charge 23% more for electricity than public providers
kadoa.com
kadoa.com
So the result is Albertans pay more than most other Canadians for electricity. Even if the actual rate is low (which it isn't), the cost of electricity is usually only 10% of my bill. The rest is "transmission" "distribution" etc. It's insanely expensive compared to next door in British Columbia.
Electric production and transmission is interesting from an economic perspective, as the physical infrastructure is almost as perfect an example as it's possible to make for something which should be governmental (or under its direct control). You just can't get working competition there. While the power itself is the perfect example of the opposite, where the market should (according to theory at least) be perfect.
Markets don’t seem to want to solve for outlier situations like extreme weather events or significant hardware malfunctions. Basically I’m talking about what happened in Texas. When it’s a safety issue, it can be hard to align incentives to make planning for outliers worthwhile to market actors.
Since contracts are superior to everything else in a spherical cow market, CEOs of companies who sold contracts for "electricity" and then couldn't supply it would have had their homes raided and everything they owned traded for generators and fuel until their customers had electricity again. Maybe the customers would've even had the right to do the raid themselves.
We aim for those to be real-time markets as well. But for some services that doesn’t fit so we instead buy the services on longer contracts.
The goal is of course to have the ancillary services to be as small and few as possible since it is a supplement creating market based pricing for the things the marginal net energy market itself doesn’t provide adequately today.
A big problem in the electricity market is that most customers don’t respond to supply shocks. They pay the same price in an emergency as in normal times. So, when it got very cold and power plants started shutting down, they used more electricity because they needed more heat! The one electricity provider who did pass on higher prices to customers and reduced consumption, Griddy Energy, was roasted in the media. Because customers didn’t respond to the shortage, utilities had to. They instituted “rolling blackouts”, which we really just blackouts for any grid that didn’t have a hospital on it.
The main reasons for this arrangement are political -- debt stays off the government's balance sheet, and labour disputes aren't "the government's fault".
Nome, it only works for fossile-based power, for any other power source (be it hydro, nuclear, solar, geothermal or wind) the marginal cost of supply is zero and all the cost is upfront cost. In that situation, the (classical economics) market equilibrium simply doesn't exist mathematically.
Any power-source which can move its production has this feature, independently of renewability.
But if you have some points in time where all the energy is delivered by intermittent power-sources, and there is insufficient power lines to transport this power elsewhere, prices can to 0, and if too much power is offered, the price becomes negative, and power producers has to pay to push in power. This is not just theoretical, it has happened in the European power market. But the equilibrium still exists. And because there are some costs associated with turning them off, it does not actually drop immediately to 0 production at negative prices.
That only describe a small fraction of hydro power: the majority of hydro in the world is “Run-of-the-river”, which means it has little storage capacity if any.
> Any power-source which can move its production has this feature, independently of renewability.
Not really. For instance, Nuclear gives you the illusion of marginal price because you can think of the cost of the uranium rods, which will be consumed faster or slower depending on your supply, but in practice your maintenance (which are also when the fuel replacement happens) are planned years in advance and are mostly paced by a mix regulatory constraints and staffing needs (your maintenance experts are in limited supply in the country, and you want to keep them busy, so you make sure the maintenance of your park is well ordered with minimal overlaps. Source: my wife makes the long terms plan nuclear maintenance at EDF, here in France).
> This is not just theoretical, it has happened in the European power market.
I know, but this has nothing to do with the question, which is in fact theoretical (“equilibrium prices” are a purely theoretical concept).
> But the equilibrium still exists.
Nope, not in the meaning of this word in the classical model (i.e. the intersection of the marginal cost curve and the demand curve).
What exists is a market price, but it's not the “equilibrium price”, and it cannot be because it doesn't exist in this setting.
But it is a problem for legacy thermal electricity producers being undercut by renewables and storage.
The new merit order: The viability of energy-only electricity markets with only intermittent renewable energy sources and grid-scale storage
https://www.sciencedirect.com/science/article/pii/S014098832...
Those are completely different activities, with completely different competency requirements, economical and political characteristics.
Also, bundling them is an anti-competitive measure. What is important for generation in particular, that is a competitive market where you can have private companies.
They regulated nat gas in my state and the service fee is more than the gas consumed.
You mean they privatized it?
Profit going to capitalist owners who don't do any work is an inefficient allocation, IMO, more than an "inefficient" government.
Government using money to buy capital and then provide services, deadly socialism.
It's always just been about capitalists wanting less competition. That's why they don't want the market to decide and fight for laws to literally outlaw stuff like municipal broadband. If they are so much more efficient, they should be able to offer an equal or better service for the same or better price.
In practice what the "small government" ideology actually does is get rid of these accountability mechanisms and put scammers and corrupt people in charge instead or relabels corruption as the policy through public-private partnerships.
Furthermore, nothing prevents applying these oversights over public-private partnerships (which is just a fancy term for outsourcing). The government decides who gets hired and on what conditions, so it can just enforce transparency requirements.
Those companies that win big pork filled contracts would never have any incentive to get the company to waste tax dollars.
Adding the profit motive in here definitely helps prevent waste
Also this is not the sole purpose of companies.. SpaceX is a trillion dollar company with 0 profit.
The free market has created everything you use the more we turn the keys over to government's the worse things get.
Companies can't get infinite profits because they will be undercut by other companies COMPETING. The government can get infinite power and control though.. they have no competition.
To establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty.
> Also this is not the sole purpose of companies.
Friedman disagrees.
> The free market has created everything you use the more we turn the keys over to government's the worse things get.
Which is why we have never needed government regulation of things like food, air, water, shelter, work safety, accessibility, or anything else. The free market provides.
> The government can get infinite power and control though
Which is why in a free society the government is answerable to the people.
This might be your personal ideological creed, but it is not a self-evident axiom you can just assert with zero backing.
> Companies can't get infinite profits because they will be undercut by other companies COMPETING
Then why haven't they?
> The government can get infinite power and control though.. they have no competition.
Are you aware other countries with their own governments exist?
Give an example of something the government does better than the market?
> Then why haven't they? Give an example where they haven't?
> Are you aware other countries with their own governments exist? And they all lose the most free market America? Why would we do more like them?
This thread's topic, for starters?
> Give an example where they haven't?
This thread's topic, for starters?
> And they all lose the most free market America? Why would we do more like them?
I'm not quite sure what you're saying here, could you rephrase?
Roads, electricity, water, heathcare, pensions, public transportation, and social services.
The best government is deeply imperfect but the regulation free Libertarian paradise is probably best demonstrated by some warlord somewhere. Great for him, not for any other individual.
And it got there in part through the evisceration of NASA.
> The free market has created everything you use the more we turn the keys over to government's the worse things get.
Government funds research that has brought us such advances as moon landings, computers, and the internet. What an odd example you chose in SpaceX
Yes after the monopoly of NASA ended we now have several real space companies doing real advancement.
I personally have never used one of these "government computers" have you?
What would you say Musk’s goal is? And do we want more of that?
Isn’t that what this very link is about? Where is the competition and lower prices?
Power, water, food etc the story is the same - or at least it is where I am. New Zealand.
Maybe small difference in finances too, very often public sector struggles with basic tools. I "feel" that private sector is a little more prone to renew that part (to satisfy the efficiency gods). That said it often backfires because they will also replace perfectly good tools or software to get the latest shiny.
Then there's mass.. but large private corps will have the same issues.
I think part of the success of this message is that it’s so obviously silly that people feel silly questioning it.
i think it is beyond clear that some of you all have never worked in federal government to have such a rosy outlook
I hate this argument for a different reason. There are entire classes of problems where monetary efficiency is not the primary metrics we should optimize for, areas where things like resilience, stability, and fairness all need to come before the purely economic considerations.
Can you turn some of that into a dollar measurement? Sometimes, but not as easily as a P&L, and the P&L wins.
The infrastructure is for the public.
Why shouldn't the public get to pay for its own infrastructure without a middleman trying to make a buck?
Public utilities receive unfair advantages like preferential financing, tax exemptions, and government infrastructure grants in your definition of subsidies, public utilities frequently receive some form of government support. (unfair as in not apples to apples comparison)
Okay sure, and if the utility is public, the public should get to set policies accordingly.
> Public utilities receive unfair advantages like preferential financing, tax exemptions, and government infrastructure grants in your definition of subsidies, public utilities frequently receive some form of government support
Unfair to who? Somebody who wanted to profit off the public? As a member of said public, excuse me for not being the most empathic towards people trying to make a buck off me.
The problem is a lot of companies functionally behave that way but there actually isn’t a mandate resembling anything like this, though it’s repeated so often I’m not surprised a lot of people it’s the case. Fiduciary duty doesn’t translate to “rip up and sell everything that isn’t nailed down, burn all your goodwill, and squeeze the shit out of everyone so you can extract every red cent as fast as humanly possible.” You are allowed to plan for the long-term. We just don’t and we create all sorts of incentives (bonus structures for instance) to chase short-term gains.
The investors aren’t going to rise up in all their fury and haul off a CEO to be guillotined because he invested in a project that spans more than a quarter. But unfortunately, plenty of businesses love operating as if that’s the case, because it gives an excuse to make quick dirty money. So they hide behind this erroneous perception of what constitutes “fiduciary duty.“ In the US’s particular form of capitalism it makes a lot of sense, even if it’s terrible for us as a whole.
A long term plan for a company is _at least_ a decade. If your plan ended today, it started in 2016 so it has had to survive COVID, inflationary periods, several trade wars, the rise of AI and now the side effects of the war in Iran.
If your long term plan has to adapt to those in real time, is it even a long term plan? Or is it really a series of long term plans cut so short they became short term plans? I can see companies adapting to just drop the long term premise entirely.
FWIW this is a myth.
> Second, absent a limited set of circumstances as defined under Revlon, a board of directors, while always required to act in an informed manner, is not under any per se duty to maximize shareholder value in the short term, even in the context of a takeover.
> To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
You would be right technically.
Practically? a firm that isn't competitive, will have lower multiples, will trade at lower stock prices, and that will make it an attractive takeover target.
Just buy the firm, drop the practices that don't improve stock price, and then pocket the difference.
It doesn't happen all the time, and some firms may have enough of a war chest to avoid this fate.
However, the pressure does exist, and it does drive conformity in behaviour.
Or do you want to redistribute the ownership of capital?
The interests of the shareholders diverge quite strongly from the interests of electrical utility customers. It is generally a parasitic relationship where they consume resources that could have been spent improving utility service for the customers, either directly via dividends or indirectly by avaricious behavior on the part of the company in pursuit of their stock price.
Unless the customers are the shareholders, as in a co-op. The article's data seems to show that co-ops provide the cheapest electricity, which makes sense because the owners are the same people as the users, so the incentives are aligned.
That is true for most businesses. People in different circumstances have different economic wants and needs, that is a neutral fact.
The parasistism you describe is only enabled by barriers to competition.
I think that's unfair. Do you disagree that companies who go public become myopic and attempt to extract more value until they've hollowed themselves out?
tl;dr Ford wanted to invest profits back into Ford company and Dodge forced them in court to pay dividends instead.
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
> Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than for the benefit of his employees or customers.
For a fuller treatment see:
There are laws that a plumber can't come into your home and smash up your pipes. That law however is not the thing that prevents the plumber from doing that, the plumber naturally works in your common interest. It's the exact same with companies, shareholders elect a board who hires specialists to run the company. Notice the shareholders are at the top.
"The company" is not a living thing. It cannot "want" something.
A company does what its management and board wish for it do to. Ergo its wants are the managements wants. Management is human, and most humans want money.
Paying management with company stock is theoretically meant to align those incentives.
Allowing outside shareholders in combination with private ownership is going to result in the kinds of short term thinking that lead to the "exits" and other profit-maximizing behaviors.
One "way out" is to make laws that give good public incentives / allow people to easily incorporate as organizations where the employees are the sole owners of the entity (co-op).
Shareholder value (primacy) is one interpretation on the purpose of companies (and a relatively recent one):
* https://en.wikipedia.org/wiki/Friedman_doctrine
There are others:
* “Profits are to business as breathing is to life. Breathing is essential to life, but is not the purpose for living. Similarly, profits are essential for the existence of the corporation, but they are not the reason for its existence.” ― Charles A. O'Reilly, Lead and Disrupt: How to Solve the Innovator's Dilemma, https://en.wikipedia.org/wiki/Charles_A._O%27Reilly_III
* “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy...your main constituencies are your employees, your customers and your products.”[72] — https://en.wikipedia.org/wiki/Jack_Welch#Politics
If you back to the mid-1900s US:
> In 1949 General Foods’ president Clarence Francis told Congress that he had a “three-way responsibility to the American consumer, to our associates in this business, and to the 68,000 [stockholders in General Foods]. We . . . would serve (the company’s) interests badly by shifting the fruits of the enterprise too heavily toward any one of those groups.” Two years later, the president of Standard Oil of New Jersey claimed that managers needed “to conduct the affairs of the enterprise in such a way as to maintain an equitable and working balance among the claims of the various directly interested groups—stockholders, employees, customers, and the public at large.” So widespread were such views that, in 1959, one writer in the Harvard Business Review complained that it was no longer “fashionable for the corporation to take gleeful pride in making money.” Instead, he complained, it was typical “for the corporation to show that it is a great innovator; more specifically, a great public benefactor; and, very particularly, that it exists ‘to serve the public’.”
* https://law.temple.edu/10q/purpose-corporation-brief-history...
Or further:
> American corporate law has long drawn a bright line between for-profit and non-profit corporations. In recent years, hybrid or social enterprises have increasingly put this bright-line distinction to the test. This Article asks what we can learn about the purpose of the American business corporation by examining its history and development in the United States in its formative period from roughly 1780-1860. This brief history of corporate purpose suggests that the duty to maximize profits in the for-profit corporation is a relatively recent development. Historically, the American business corporation grew out of an earlier form of corporation that was neither for-profit nor nonprofit in today’s parlance but rather, served a multitude of municipal, religious, charitable, educational, and eventually business purposes in early nineteenth-century New England. The purposes of early American business corporations—rather than maximization of profit to private shareholders— were often overtly public, involving development of local transportation, finance, and other much-needed economic infrastructure. With the rise of factory-based manufacturing, railroads, and other capital-intensive industries in the middle decades of the nineteenth century and the advent of general incorporation statutes, the purpose of the American business corporation shifted fundamentally from public to private. By 1860, the stage was set for the modern firm.
* https://repository.law.umich.edu/mbelr/vol9/iss1/2/
The idea that it is some kind of 'legal requirement' is also a myth:
Nope there's no legal requirement. Management is happy for you to believe there is because they get paid in stock.
The only legal requirement is to make decisions that are in the shareholders' interests, rather than the management's. That means short-term-bad, long-term-good decisions are actually strongly encouraged.
As far as I can tell utility companies are pretty bad at "vast profits to shareholders".
Paying for Their Profits: How Ratepayers Foot the Bill for Soaring Utility Profits - https://energyandpolicy.org/utility-profit-report/ - March 12th, 2026
- Some utilities consistently operate at significantly higher margins than the average. The top 10 utilities by average margin over 2021–2024 include MidAmerican Energy (27.22%), Florida Power & Light (23.51%), Nantucket Electric (23.24%), Empire District Electric (22.45%), Florida Public Utilities (20.35%), CalPeco (20.28%), Public Service Electric & Gas (19.44%), Duke Energy Carolinas (19.07%), Alabama Power (18.71%), and AEP Texas (18.63%).
Comparing long term returns using a website like this would help figure out if the businesses are over performing.
I am fairly confident the cohort of those who support investor owned utilities are a vocal minority.
Note that there exists the same incentives for publicly owned and investor owned utilities of voters today wanting lower utility prices at the expense of future utility customers by keeping capital expenses down today.
>I am fairly confident the cohort of those who support investor owned utilities are a vocal minority.
I will be the first to support only publicly owned utilities. But that has nothing to do with using bad logic and numbers to determine outsized margins.
These are their five year stock gains, with the general market for reference.
Market (SP500): 68%
Market(tech): 89%
XEL: +20%
AEP: +51%
SO: +47%
EIX: -5%
CPK: +2.5%
AQN: -64%
NGG: +30%
NEE: -3.5%
Looks like a pretty bad industry for profits, even stacking the dividend on AEP, it still comes up short of SP500.
Utility companies get local monopolies and in exchange their prices are regulated. Consequently they have moderate but stable, essentially guaranteed, returns.
https://www.finra.org/investors/insights/concentration-risk
https://en.wikipedia.org/wiki/Concentration_risk
https://ncua.gov/regulation-supervision/letters-credit-union...
That makes very little sense.
And stock price is not a measure of profit.
Although, a 5 year investment term is too short for comparing equity returns for a long term investment.
As interest rates go up, investor owned utilities increase their rate of return on equity ask, pushing up consumer electricity prices. A baseline of consumer electric demand is inelastic, and required for life.
But yeah, natural monopolies with inelastic demand (power, water, healthcare, shared infrastructure) should be publicly owned, imo.
Which is to say if the solution was that simple and the fruit that low hanging it'd be done already.
At the end of the day whether profit or not the problem is that there's no consequences for sucking and no reward for not sucking. Government agencies tend toward fiefdom expansion, amassing power and graft. For profit entities tend to try and create situations where they can extract rents on the flimsiest of pretexts. They both seem to suck for energy though perhaps government sucks a tiny bit less. Neither "solves" the problem because neither seems inclined to steadily march toward cheaper/better/faster/whatever-er energy. They both seem to try and increase the suck if left to their own devices.
The rest of the state is served by either local cities with their own utilities or cooperatives. The cooperatives are not government agencies, they are privately owned non-profit corporations whose customers are the owners. These companies aren't regulated by the state PSC and have the ability to set their own rates unilaterally. The only regulation they have is that they report their rates to the PSC, but it's just a report, no approval
Technically they're almost all subject to regulation by the US Government as a condition of taking loans in the 30s/40s (and most of them have rolled that financing over and continue to use it to finance operations even today) but for the most part that regulation just says they have to at least charge enough to cover their interest, and can't sell their systems without the feds' approval
They could raise rates as much as they want, but the structure of a customer-owned company like that is the profits just get redistributed back to the customers, so there's no reason or incentive to do so
And, FWIW, that 23% number from the linked article is about right. GPC is usually 15-20% higher than most of the coops and city-owned systems in Georgia (there are some that are higher). And this is even with some of those coops and cities actually buying power wholesale from GPC
Also the "refs" should be in charge. That is to say the working class are the refs and they should be able to build infrastructure without the capital owning class inserting itself as a rent-seeker between them and these services.
But outages, outage response times, infrastructure, investments, etc. are the other side if the equation.
I have no idea. Maybe investor-owned utilities also provide worse service. However, without accounting for that, the article's claims don't mean much.
except its completely not:
electricity has stability, availability during peak loads, robustness under inclement weather etc.
Water has purity, safety, and flavor. (Austin water in the fall tastes like leaves :gross:)
Bring on the competition!
The only reason cities are having issues with water and electricity is because we cut taxes on the rich. Wages went down and service quality got cut to make the CEOs richer. The US has been coasting on all the infrastructure built in the 50-60s when we had a 90% federal income tax rate and CEOs were capped at making the 2026 equivalent of 5 mil a year. Tax dodging was stopped, everything was funded and life was affordable.
Or are they just reselling access to some ahared legacy infrastructure? In which case any "competition" is very likely an illusion.
There is only one public water system, every house connects to it. The state tasks specific companies with its maintenance (these are often not utility providers themselves, just construction/maintenance companies).
Consumers attached to that system have a metered connection, but water just flows as long as there's enough overall. Your utilities company doesn't have to move any physical water at all. They just have to eventually "settle" the amount of water that they sold to their customers. They do so by buying and then forwarding options contracts. The electricity and gas companies are the same. They compete on
- trading (who knows best when to buy how much?) and
- consumer-facing marketing
This is how a lot of the modern economy works. Through the power of abstraction, you can run an online store without producing or shipping any items yourself and a delivery restaurant without cooking any meals.
That seems odd. Does a local water futures market exist.
> - consumer-facing marketing
If it's all going through the same pipes, what is there to market.
Electricity is a different story - it can be traded day ahead and even marketed, but none of that makes sense for water delivered over shared infrastructure.
They keep coming up with fancy new pricing schemes or random gimmicks to throw in. Nobody really seems to give a shit though.
does every house have 4+ water lines, gas lines, etc. running to it?
if not, i'm not sure what you mean.
Furthermore, switching from one provider to another is inherently difficult. There is only one set of pipes leading to your house, how you going to switch to an alternative? Who is going to build the line for the 1 new customer?
And finally, splitting the business across the vertical doesn't work either. Generation of power is tied to grid management, this is tied to transmission maintenance and expansion.
All things considered. Monopoly emerges naturally and rent seeking is pretty much given. There are only two options left. Either the utility is operated by government for common good, or it the monopolist is so heavily regulated and controlled by the government, that it is, in effect, its extension.
They're producing some 100GWh/year. Which is not half bad, considering they're typically at or below market price and often pay a ~6% dividend.
Maybe with costs for solar dropping more co-ops are looking at adding it at least where it might work to reduce peak demands.
(details are from memory, so let's not quibble and argue over them, my autistic friends)
Back in 1906, after the Big Earthquake happened in SF, the US Congress took pity on the city of SF and built the Hetch Hetchy dam to provide the City with reliable water supply (so the City wouldn't burn down again in the next one). The dam would also generate electricity, and that power came free (except for transmission costs, because the City owned the generation infra). So they started to lay the power lines from Hetch Hetchy to SF.
But, as it just so happened, they ran out of wires and poles just before they could reach SF. So PG&E got the contract to finish off the last mile to the City.
And after it was all over, someone found the missing materials lying in some warehouse, rusting away...
Electricity does not have to cost so much in SF, given that generation is free. And yet we pay over $0.50/KWh in the City.
I'm all for hating on PG&E but this just sounds like a Reddit-style meme.
I was off by a bit. Apparently, the City claimed to have run out of money just short of the finish line.
You can find more articles about PG&E and the Raker Act.
There's no reason we should want this for ourselves.
Oh, they don't need to buy it, they already inherited from their rich parents. The world is just a set of trading cards to them at this point.
Elon Musk's fake money could buy a new $10 million mansion every single day--every single day--for THREE CENTURIES, and he wants more!
Society is delusional. We can't even collectively agree to tax psychotic money-grubbers who cannot even enjoy the fake wealth they have their names on.
$1T = 1,000,000,000,000
$10m = 10,000,000
*365 = 3,650,000,000
*300 = 1,095,000,000,000
people should not take economic take from tech people
A deregulated market should provide choice, if it provides monopoly the gov should step in either by breaking up (forcing choice) or making public (forcing good).
I.e., socialize the costs and privatize the profits.
What value can private companies bring to end consumers when they're buying from the same public producer at the same base cost? This is nothing more than a disguised handout.
Go google "natural monopoly" please. No one is arguing that work is not happening to provide a service.
We're arguing that capitalism clearly fails to achieve good outcomes for optimizing the quality and cost of that service in the case of natural monopolies.
A natural monopoly is one where a product or service is:
- Widely considered fundamental to the public good (and in most cases, has very inflexible demand, meaning that people will often pay any sum to access it)
- Whose cost overheads are either fixed or grow slower than the variable costs (meaning that the investment required to scale the service not accounting for costs that scale with individual usage benefit from economies of scale)
- Easy to be gamed for profit in the hands of a profit-driven entity (either in the form of extortionate pricing directly, or cost-cutting on things like infrastructure maintenance; a good example here is how PG&E has infamously failed to maintained their power lines in California, leading to large-scale wildfires)
In the modern day, the best example of these are public utilities: water, power, road networks, public transit.
In these cases, the latter two points are used to justify public ownership, which in turn defeats the third point.
Massive swaths of the US required government action to get telephone and electric service. In many cities/counties, the city or county owns the power utility. In other rural/suburban situations the power utility is a non-profit cooperative that was encouraged/bootstrapped through low interest loans in the 30s and 40s. Telephone universal service was achieved because AT&T agreed to it in exchange for the government allowing it to be a (natural) monopoly
In the UK, British Telecom had plans to roll out what we'd now call "Fibre To The Premises", offering digital communications at maybe as much as 256kbps, multiple telephone lines, and even Video-on-Demand, by the middle of the 1980s across the whole country starting with rural areas.
However, it was smashed up and sold off in bits by the rapacious Conservative government in 1984. Now where I live is on track to get BT fibre - or fibre of any sort really - by 2034.
Telephone was a monopoly because it doesn't make sense to have more than one company string a wire to every house and business. But, all that wire could carry until the 90s was a voice call
Likewise, in the 60s/70s/80s cable TV became a thing but it didn't make sense to have more than one TV wire to every house, because it already has all the TV you can get, and at the time all it could carry was video channels
In the 90s these networks converged: when everything is digital, a network carrying digital signals can carry any kind of data
So, in urbanized and suburban areas we largely have a competitive market in what would otherwise be a natural monopoly. The problem is, because it's competitive in like 80-90% of the country everyone's been relieved of their universal service obligations (which applied only to voice service anyway) so there's been little incentive to expand into more rural and underserved areas
There's an ISP that has completed a buried fiber rollout in my neighborhood as of a few days ago. I'll get plugged into that soon-enough; I got a card in the mail that says it's time to give them a call to schedule an install.
The price has stayed ~about the same over time for broadband; I've always paid about 50 bucks per month for always-on broadband. Sometimes a bit more and sometimes a bit less, but right around 50 bucks anyway. If I were to chart it with an inflation adjustment then the price would be trending downward.
Speeds, meanwhile: They trend upward. Quality of services improves.
A quarter of a century ago, my 860/160kbps DSL used to go down every morning promptly at 0200, stay down for about 10 minutes, and then come back with a different dynamic IP, and I was frequently on the phone with them about some issue or other.
The 500/20Mbps DOCSIS I have today is solid-enough that I can't think of any aspect worthy of complaint, and I've only made one phone call about it in the past 6 years.
I've always lived in the US. Am I doing it wrong?
-
edit: The new fiber provider actually just called me. I signed up for 500/500 fiber for... 50 bucks per month, and they'll install it tomorrow afternoon. The price trend continues.
Not necessarily so. In cities it is quite normal to run 2-4 optic fibers to most buildings; my building in Brooklyn has 2 different fibers and a cable link. Equally, there are 2-3 national mobile providers which cover most of the entire US.
In the suburbia this breaks, or course.
It's why at one point we had 4 satellite TV options in the US at one time (C-Band, Primestar, DirecTV, and Dish Network all existed at the same time) but in 98% of the US there was only ever one cable company (some small cable companies did try to overbuild but it was and is extremely rare) and certainly only ever one landline phone company
Just having government run it doesn't solve all the issues, and often adds in opportunities for corruption.
Utilities have to balance investment in infrastructure. We have good reason to move away from carbon heavy sources of electricity, but investing in those new sources and the transmission capacity doesn't just happen for free.
We also need to consider delivering electricity to rural areas, which is usually quite expensive. San Francisco is considering taking over the local utility from PG&E. That might save money for local ratepayers, but would almost certainly make things more expensive for other people in the state who were effectively being subsidized by SF.
Figuring out how to do these things efficiently and balancing multiple goals is not something governments have a great track record of. I think there's a lot of opportunity to construct better market structures to incentivize investment and competition AND keep rates low.
It's only tough if your politics is Republican or libertarian, and "privatize everything"
(Tbf when they did the first of these two things, lots of housing units were unpopular and empty.)
So, private owned is more expensive (see article) and under funds the future.
So the only “tough unsolved” part here seems to be that a lot of people have been fooled into thinking private is better.
Every state in the country has a public utilities commission and they are constantly immersed in complex policy work from implementing legislation to working through an endless docket of cases that fine tune policy to specific tasked out responsibilities like getting a "standard offer". Sure it's complicated but I can't think of any reason that defaults to "don't regulate". We regulate healthcare too, and Medicare is always cheaper than private alternatives.
The problem with leaving private actors to their own devices when they have monopolies is that every conceivable grey area of judgment calls that impacts profitability will be subject to abuses of discretion, such as building out overpriced infrastructure, and investing in cheaper, unreliable transmission infrastructure instead of building for the long term.
The general problem here is that the "natural monopoly" tends to get drawn far too broadly.
For example, people call the telephone network a natural monopoly, which was Ma Bell's argument for making it a monopoly. But which part exactly is the "natural monopoly"? They were telling you what kind of telephone you could use (and requiring you to rent it from them), and tying not just local phone service but long distance service to the use of their last mile lines etc.
Even when they got broken up, the thing that kept the AT&T name was the (solitary, still a monopoly) long distance carrier, as if that was unquestionably still a natural monopoly. Then the internet came and proved otherwise. It turns out if you want to make a connection between New York and Los Angeles, it doesn't matter very much whether it's routed through Houston or Denver or Chicago, and if you have to you can even use a route that goes through Orlando and then Seattle. So transit is a competitive market and "long distance service is a natural monopoly" is BS.
The actual natural monopoly is the trench or utility pole on the road that carries the cable. At worst the cable itself, but installing the pole or digging the trench is way more expensive than adding another cable to an existing one (in the absence of some regulatory capture or inefficient incentives making it otherwise). And it's certainly not the things at either end of it. The other end of the cable that goes to your house should be at a local peering exchange where different companies compete to patch your cable into their equipment.
It's the same for electricity. The natural monopoly is last mile distribution, not generation or even really transmission.
And then if you give a private company a monopoly on something that isn't even a natural monopoly, of course the results are stupid. The thing that causes good results in markets is competition. So what you want in order is competitive market > local government monopoly > private monopoly. But you still don't want the second for any part of the system where you could have the first.
At the end of the day it will be about tradeoffs. CA/TX and others "deregulated" electricity by splitting the public-side (transmission and distribution) as heavily regulated from the generators and consumer purchasing sides. In TX, nominally, this lowered rates, though it has been some time since I researched this space. What it also did was cause pretty bad second order effects for transmission providers since they can't exclude use of their owned networks due to the physics of grids. It also caused underinvestment in the grid, causing the major freeze-outs and near-collapse of the natural gas delivery pipelines that made the news.
There CAN be advantages to bringing in private enterprise, but, they need fairly strict oversight to not cash out/distribute the funds needed for infrastructure O&M/new build to shareholders.
You have it similar in US. I bet a mayor can build sewers, collect garbage and build a lot of roads without asking the governor or president.
Or did you conflate government with public sector?
And if you underbuild it becomes a problem for the users. And if you overbuild... well, let's assume investors won't let you do that. So, once public sector guarantees demand for decades upfront, it becomes more sensible for it to just have the plant older-built and run it itself.
Youre gonna have another company digging a second set of tunnels?
Does it make any sense whatsoever to have two?
Yes thats how it works in Tokyo. They get land, build stations, then dig the tunnels. Their profit comes from fares and rents around the stations that they own.
Britain and the US are both good examples where privatization of the rail systems has been a complete mess. The US being the worst public transit rail system of any developed nation.
I'm all for multiple city bus operators.
A common "monopoly" of the physical last mile served by many providers traveling over it
There is a small angle where several ISPs can compete around customer service, data caps, equipment rental, business support, price margin, etc. While then forming larger units that put pressure on the physical provider to not stagnate the underlying infrastructure.
On the other hand I've got municipal fiber, and it just works. Great friendly local support (at least from what I understand, I don't really call them), no data caps, the price has stayed fixed for it's whole existence. I don't see any reason to want another layer on top of that, as it would only make all of those things worse.
The incumbent coax provider ("cable compay") still exists. If the municipal fiber provider stagnates on technology, then they could theoretically step up, right?. But given they had been coasting on a monopoly for decades (the other option being DSL), and that their service is still slower than the municipal gigabit (now deployed for a decade), I think that is giving them too much credit! In fact I've seen more talk about next-gen connection speeds from the municipal fiber provider.
For all the marketing about "free market competition", large corpos can be less innovative and responsive than small governments. So for the foreseeable future, I see no reason to not just voice my support for municipal fiber everywhere.
I would trust my county to deliver my fiber internet. All my government services work great. I literally marvel every time I visit our municipal dump, which is cleaner and mode efficient than my home country of Bangladesh. But I wouldn’t trust most of the other counties I’ve lived in before to do it (Baltimore, Wilmington DE, Chicago, etc.).
But when cities have the population density to support multiple competing Internet providers with decent physical layers and non-extractionary terms, then there generally doesn't seem to be much of a call for the city to provide its own services in the first place.
Furthermore cities that are incompetent about deploying infrastructure are going to be similarly incompetent at facilitating the permit process for private infrastructure - giving governmentesque incumbent providers a hold over a captive market regardless. So while this is a general problem that deserve its own exploration, it wouldn't seem to have much bearing on Internet access specifically. The real concern is municipalities that would be perfectly capable of providing Internet service (along with the rest of their municipal services), yet are being held back from even trying.
(Also I don't know what the Japan example demonstrates anything because 1. Japan and 2. that 1/3 ownership stake belies a much bigger controlling interest due to being the government)
ISPs could compete on lack of congestion on their backbone, privacy, latency, price, "value add" features (like email, website hosting, etc), and speed depending on the model of the wholesale network
Congestion/latency/data caps - I've observed no congestion, and have no traffic caps. "Competition" would create differentiation on providing less service.
Privacy - it's a municipal ISP. I'm pretty sure they're not selling my data to the surveillance industry. If it turns out they are, then I have recourse through the local democratic process rather than the standard "tough shit" response from a corpo. Given how the markets for cell service, webapps, etc work I don't have much faith that even in a competitive market, this would end up as a point of competition.
Email / website hosting / etc has nothing to do with the physical connection and therefore already has strong competition across the entire Internet. And actually this applies to the privacy point as well, with VPNs.
The model of the wholesale network is GPON. They obviously didn't string a dedicated fiber from the NOC to each house. So either speed is constrained by the gear the wholesale network buys, or the wholesale network would need to run a bunch of extra home runs so individual provider gets their own home run to light with their own gear.
I could see this last bit being a benefit in 10-20 years when gigabit isn't considered fast enough if the municipal fiber doesn't keep up. But given the municipal fiber built out the gigabit network while the coax incumbent was happy collecting rent on old infrastructure, I'm willing to give them a pass for the foreseeable future.
As to the wholesale network being GPON, there's always a point at which the network goes from a shared medium to a dedicated strand to the house. Wherever the PON splitter is, multiple splitters could be co-located, or, direct connections to be patched into for ISPs that don't want to use GPON. A dedicated connection is another place competition could exist, for example
Are they part of the regular fare structure?
For an example of the opposite, you can unfortunately look at the Canadian telcom oligopoly.
The problem with public ownership is that it drives price is too low because it allows people to vote on prices. Your average age 60+ voter doesn’t care if lowering the water bill now means that the system will be in bad repair 30 or 50 years from now.
At the end of the day, there is no magic policy bullet to fix problems with the people. Public infrastructure in the US sucks whether it’s publicly owned or privately owned. But I bet if the Japanese trains were publicly owned instead of privately owned, they would still be pretty good.
The fixed service fee cost $40/month which was more than the natural gas consumed every month but Jan/Feb. They also make cancelling difficult, I was put on hold for 40 minutes without an music so I didn't know if I had been disconnected or was just on hold.
Electric is run by one company and their service fee is $15/mo. Their customer service is also much better.
(I am aware that this is a facetious statement, and the main point you are aiming to make is that there are other factors that matter.)
Separately, China has been moving more and more of its economy to the private sector for decades, ever since Deng Xiaoping visited Singapore: https://www.fairobserver.com/economics/china-and-its-mentor-....
I will disagree by stating that China's private sector isn't the same as a western or typical market economy private firm. The degree of state ownership is and central control are hard enough to make comps easy. State support in other ways other than ownership is another topic as well.
I will also say that the Chinese government is receptive to its constituents. Not to the degree that we can expect in a democracy, but its not oblivious either.
The rest of your point I agree, but good maintenance is not a given regardless of private ownership or government ownership. In fact I would say this is part of being a monopoly: there are no competitors and no market forces to compete on reliability.
Its not about maintenance, its about pure math and efficiency.
Natural monopolies have 0 advantage in terms of price discovery, therefore there are no market forces. And you get all the disadvantages of a monopoly without any of the advantages of capitalism.
Many purely capitalist countries still advocate for natural monopolies to be goverment run (Norway oil being public, Singapore owning all the land and housing, Spain having public healthcare) and all of those examples beat countries that have privately owned natural monopolies.
Instead it one where incumbents try very hard to convince everyone it must be a monopoly.
Having a private market does not make something not a natural monopoly. Healthcare, education, land, and energy are famously cases where market forces do not find a lowest possible price floor.
the main things that cause a natural monopoly are things like high initial cost, a lower cost per unit created and the most important one a sub-additive cost function.
If you have a single healthcare provider for example and 2 hospitals, you can have 1 IT team to handle both medical records, that is one engineering team, 1 database, 1 security team and then you have the costs that cannot be saved such as doctors nurses and staff in each hospital.
Meanwhile if you have 2 healthcare providers you need 2 engineering teams, 2 dbs, and 2 cyber teams while the cost of doctors, nurses and staff remains untouched.
That added cost makes the "competition" subadditive. You lose more than you gain by having multiple players in the market. Which is why American's spend more in healthcare than single payer systems like the ones in Europe. Just plain old boring math. And its not even a new concept. Adam Smith calls landlords "leeches" in his works
The IT teams are just very obvious redundancies in a site like HN, but the major costs come from things like bulk medicine buys. Having a single team, and a larger order means you get cheaper prices compared to every hospital negociating their own prices against Pharma companies. Its why single providers in europe get better prices than american companies in basically every single medicine category.
But you can keep going and find tons of recurring, avoidable costs that simply are non additive with competition in natural monopolies. And not only is the math easy to follow, but the empirical experiments of privatising those natural monopolies always fails meanwhile the public ownership almost always works
Roads are the outliers here because governments usually have direct oversight on them. They are more infrastructure rather than utilities.
Unlike roads, everything else discussed here (electricity, water, sewage, transit), even when public, is operated by a public company, not the government. Maintenance is part of the company's operating costs and is accounted for in the price consumer pays. And while there is no competition for reliability, there's also no obligation to maximize profits for the shareholders.
Of course they all like to push off maintenance as long as possible to avoid tax increases, but they will do them. Private industry will literally choose to wait for failure rather than do maintenance because they've discovered things can last longer than expected and they save more money by waiting for a catastrophe (and they can extra more government funds as they "don't have the resources" to fix a problem. See california's PG&E [1]).
The perfect example of this is the train system in the US and the problem we have with derailments. The US has more derailments than basically anyone else and the reason for this is that the rail owners aren't doing maintenance.
[1] https://www.actionnewsnow.com/news/top-stories/is-pg-e-press...
I don't think it applies to electricity in many cases. If there are investors in building new electrical capacity, then it likely means that the area is underserved, and the prices are naturally higher. The government apparently did not build what the market is ready to pay a premium for.
The original Edison's electric company was private, and for-profit. It started selling electricity in 1882. I wonder how soon would a government-owned company manage instead.
If I am not mistaken, government gives tax breaks or subsidies to induce private firms to enter the market and build capacity.
The only reason investors are building capacity today, is because the demand for data centers is projected to go up.
What happened at the start of electricity, is different from what happened when it was to scale. The nature of the good decides what the most efficient form of production is advisable.
Instead the Electricity Board got privatised with promises of lower prices. Electric prices tracked inflation and general cpi from when Queensland electrified until privitasation in 1997.
Since then prices have gone up about 75% beyond inflation.
I had though though the power is in the hands of companies, they are govt owned [1] [2] I am inclined to say thankfully the power grid up our way is not in the hands of private energy companies or fly by night riff raff - the types that make promises of cheap power but offer up confusing power plans that are actually not that cheap, especially given what I've heard from those unfortunate enough to have been caught that I've chatted to down south. Every so often some grubby fingers try to talk up moves to entice the govt to privatise the energy grid ... something which nearly happened in the 00's.
If prices have risen steeply from the 90s in Queensland, a good guess would be it's due to a need to raise capital to further extend power networks as well as repair / replace a lot of the much older original wooden poles that reached their end of their long life as well as pull out many of the newer poles sourced from where ever, which though they initial passed muster, failed relatively quick.
The natural response is to assume that corporation will be more efficient, and there the consumer will get a better end result. And, again, that was probably true for some period of time. The problem is in a corporate world you need to grow your profits by 3-5% a year (minimum) in order to be considered a "viable" investment. So what happens when your customer base isn't growing at 3-5%? Well you cut costs to improve your profits or you raise prices or both.
End result is the consumer ends up worse off, they got a one-time efficiency gain by switching from government to corporate - but then pay for that over decades.
Say you have a section of urban highway that is severely congested. If roads are a profit-center, congestion is a strong market signal--demand outstrips supply! More people want to use your product, but your supply is insufficient. The obvious solution is to build more supply. Until you do, you're leaving money on the table! Quick, expand the road! Build a tunnel! Do something!
The exact opposite logic applies when roads are a public good. They become a cost-center, and any concern about meeting demand becomes subordinate to a thousand other concerns. The costs of building and maintaining roads remain real and immediate (They cost money! NIMBYs hate construction!), but the benefits of building and maintaining roads become abstract and distant (the benefits are: fewer complaints? More economic activity in the long run?) The laws of supply and demand no longer apply, and you find people saying insane things like "Why should we expand that congested highway? Expanding it will only draw more cars, and then it will still be congested!". In a free market, such nonsense is unthinkable. No business would ever say "Demand is so far in excess of supply that increasing supply is pointless!" Yet as soon as market incentives are removed, this nonsense becomes the default.
Every day on my commute, I spend ~30 minutes driving 80 MPH on private highway, and the instant I hit the public highway I am in bumper-to-bumper traffic, as one of the most congested stretches of 4-lane highway in one of the largest cities in the country is reduced to two lanes as it passes under another highway. It costs me 30 minutes of my life every day, and there are no current plans to resolve this bottleneck. The notion that public roads are saving me from evil rent-seeking capitalists is just silly. I prefer self-interested capitalists to incompetent public administrators.
This isn't to say that roads should be totally deregulated--incentives matter, and the state has a legitimate role to play in ensuring that consumers are protected from malicious actors. But the incentives associated with public ownership are so perverse that it's hard to imagine a private option resulting in worse outcomes.
> at worst they strip the infrastructure of all value without any maintenance, getting taxpayers to build it again.
The worst-case scenario for privatization is the default scenario with public ownership!
At least make it easy to build powerplants for determined private enterprises to speed-up progress where governments fail.
Having seen the sausage being made in both, I would say that private utilities are very little for the additional $$$ they extra t for shareholders. I would just as soon see all power production and transmission nationalized.
It's interesting how once people were successfully swindled into privatizing everything, the rhetoric changed from "everything will be cheaper!" to "well of course it's more expensive, you want to reward them for their superior service, right?". Apparently none of these extra costs go to appeasing middlemen or lining investor pockets, all these companies clinging onto natural monopolies are just too good at what they do. They have no conflicts of interest whatsoever!
Giving the government more money to do things works really well. Here in the USA we've given the governments 3x more money in real terms to run our public schools, and we've gotten worse results over those 3 decades.
Governments also get to hide real expenses that audited private enterprises never could. The "cost" on this website assumes what's paid is adequate to manage the business which is wrong.
You present this as something inherently true, but really there is no reason for this to be the case. We could make it so government entities are significantly more transparent than would be reasonable for a private entity. In practice, that is already the case and what you said really isn't true, though I'm always in favor of more transparency.
That reminds me, my hometown, the city of Hamburg, bought back the public utilities it had privatized in the 90's, following a public referendum, in 2014.
I recall that one reason was prices for electricity and gas going up after the privatization.
Go figure.
And, as a customer, it's a bad experience. I have to switch providers every year, because the rates you get the first year are competitive, and then for the subsequent years they offer much worse rates, 50%-100% higher than the previous year. So, I either have to deal with that annual pain in the ass of picking a new provider and setting up billing, etc., or I pay among the highest rates in the country when the rate spikes. There's also the constant deluge of mailers from competing providers, and gangs of sales people hanging inside Walmart or going door-to-door (I have a "No Soliciting" sign, which is only occasionally respected).
I used to be a free market purist, believing most things would be better with competition, but for a natural monopoly like electricity, it's just forced inefficiency. The law requires the illusion of competition, but the real work of keeping the lights on is done by one entity. All the other power companies are just middlemen, running their own marketing and billing operations, but not doing much else.
I would be very happy to have electricity go back to being publicly-owned and operated, with regulation and oversight.
And, for another data point, the best trash/sewer/water experience is, by far, when the municipality handles all of it and there is a monopoly on those services (even if operated by a private entity). I've lived in places where you subscribed to one of several competing trash pickup providers, and that is always more expensive and provides less (rarely includes regular bulk pickups or recycling in the standard plans, for example). And, you then have loud, smelly, trash trucks rolling through your neighborhood multiple times a week. Admittedly, in those cases, it's often a rural area where picking up is more expensive for the operator due to longer distances, but even in the suburbs it costs more and does less.
And yeah, similar experience for public vs private power and gas companies. A thing that I think many free market purists forget is that local officials tend to live with the knowledge that they will have hell to pay at the next election if they allow the public utilities to start pissing people off too much.
Public owned ones by definition are allowed to run in a deficit and have alternate source of "charges" in government subsidies.
I live in Wyoming. We have a member-owned cooperative utility. At the end of the year, it pays every member a dividend. We vote on leadership and major policy. It’s locally responsive but still privately owned; the Governor can’t turn it into a slush fund.
EU average is almost double, 40 cents per kwh
Well we see how that turned out.
This is about what we pay here for delivery back to the grid, yes pay, not earn, they don't want our solar, we have too much (yes we can turn them off, and we do).
Why in the world would the cost of electricity be a factor in wanting to separate federally by anyone with the slightest amount of brain tissue?
https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/ma...
Which also has this quote: "In Alberta, where electricity is supplied through a competitive retail market, residential prices tend to be slightly higher and more variable over time compared with most other provinces."
Most of my free time was spent on the necessities.
Moving to SF and embracing that lifestyle (being able to afford that lifestyle...) freed me up for the pursuit of happiness.
I look at government the same way: public service should assume some of the burdens for the citizenry. utilities should be one of those things assumed by the state, paid for by taxes. The administration of which has a goal of driving down costs for customers, NOT for increasing profit
Seattle City Light CEO $340k 8% bonus
Bonneville Power Administration CEO $245k
Avista Energy CEO $4.77 Million
Puget Sound Energy CEO $1.7 Million up to 9 Million (includes bonus ramp targets)
Now let’s play a game of which are public and which are private.
For sure I now pay for all these marketing campaigns: they all offer a cheap first year. So I have to switch yearly to get a good "welcome present" (that the non-switchers are paying for me).
Privatizing a commodity-service, that utilities are (electrons/water/gas -- it's all very standardized) is the most ridiculous to me. The innovation a supplier can bring you is mostly it's marketing campaign.
Still better than PG&E I imagine.
Nothing else has value to them apart from capital and its "profitable" usage, so the fundamental reason why corporations even exist, to collectively bring about real world value takes a back seat.
A case in point would be the Mamdani stores that are being launched in New York City. They'll be offering groceries at a steep discount. Socialist activists could then turn around and write headlines like "private-owned grocery stores charge x% more for groceries than public providers", but would that mean that public groceries have overall lower costs than private ones? Obviously not. It would be foolish to use price data to argue that the public model is somehow better than the private one. You would need to know whether the point-of-sale savings represent actual savings to the consumer, or whether the difference is being paid in some other way.
It doesn't do consumers any good to pay $50 less their utility bill if that $50 savings is made possible by charging an additional $60 in state and local taxes.
In California for example, PG&E has an incentive to propose the most costly projects, make the worst deals with the union, etc. Of course the union is also very happy with this and will provide political cover for PG&E. Every extra dollar they spend on capital is an extra 10 cents every year they can charge the ratepayers and then pass on to shareholders.
You obviously see the result here where it's not just the profit margin of the private utilities that's causing the higher cost. Even if you zeroed out their profits and reduced rates accordingly, you'd still be paying more, because the private utilities spend more. So much for privatization saving money.
The fact that co-ops are even cheaper than private utilities is doubly crazy since most co-ops are rural, and the amount of wire to serve each customer is way higher than private utilities which tend to serve cities more where it's cheaper to provide service.
IMO the solution would be to make profits based on some sort of quality/cost of service benchmark rather than just expenditures. The problem of course is that it's hard to make fair metrics that aren't gameable.
It does not appear to adjust for any of the things that matter. Taxes, cost of capital, generation mix, etc. I think the “insight” is impossible to call an insight with the lack of real modeling.
What's the cost of capital on public providers? And on private providers?
What's the energy mix for each of them?
Are both providers profitable? How profitable are each of them?
Are there subsidies involved? Either directly or indirectly via lower than required fee increases due to political pressure.
Frankly it's tiring to always see the same flawed arguments here.
Has Santa Clara diversified their energy and Sunnyvale did not?
How do you explain increases in the cost of distribution?
I actually think the most interesting factor is listed down in the “about the data” section: “ Most of the gap opened from 2020 to 2023, during the energy price spike: 25% at investor-owned utilities, 11% at public utilities and co-ops. Before and since, both rose at about the same pace.”
So, it might be basically the same story everyone complains about. When there’s a shock, companies tend to quickly hike prices higher than they need to, but after the problem is resolved they’re slow to let prices come down again, if they do at all.
And that detail casts doubt on other explanations because if they were the case we wouldn’t expect to see the divergence be largely confined to the pandemic. There was still a gap before 2020, but it looks like it had been a fairly steady ~1¢/KWh.
For example, in my home state of Massachusetts, for-profit utilities are required to participate in the state mandated home efficiency subsidy program, MassSave and add surcharges to the delivery charge, to a state-wide cost of $4.5 billion for 2025 - 2027.
Municipal utilities are exempt.
We’re at the bottom of the list on this post, because it’s looking at recent inflation, but municipal utilities cost much less in Mass. But there are many components to this difference.
The vet for my cats, charges 450$ for spending 5 minutes checking the cat, 2 vaccines and out... then I ask.. are you part of a investor owned or equity owned.. they answer yes...
Do you want me to tell you about health insurance?
Why is people not angry? the "100$ er visit" option of health insurance is always 1400$ of "itemized" things...
Oh yeah... iphones are kind of cheap...
Wait a sec, were... but the rest of the electronics are cheap right? even if we will never be able to own a home?
Rammagedon? what do you mean the ps5 is 1k$? do you remember when 300$ where insane?
The referee should not be able to play the game.
It didn’t go that well.
We have the most expensive healthcare in the world and some of the worse it is a over regulated industry full of complexity and corruption. Look at industries without government involvement, the less involvement the cheaper and better things get.
healthcare, education, and child care all suck.
tvs, software, and clothes, all cheap and very good.
I love this chart: https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2F...
Whether that happens, is up to the electorate.
Something a lot of transplants don't learn for years: Palo Alto, Santa Clara, and Alameda are members of NCPA, so you don't pay PG&E, amusingly PG&E pays NCPA for access to its hydro and geothermal.
But if they saw this they'd immediately like, subscribe, and share broadly with positive commentary.
Utilities have made $200B+ in profit since 2021, new report says - https://www.utilitydive.com/news/utilities-have-made-200b-in... - March 17th, 2026
That's $200B that could've, in some parts, gone into grid investment and lower electrical costs. Instead, it's the rake for financially engineering being a middleman.
I'm confident this is solved for in the long term with more coop and muni ownership of grids, alongside rapid deployment of solar and batteries so folks can go off grid if they want, as is happening across Pakistan [1] [2]; in the interim, it's annoying though, and for those who cannot afford to be squeezed for these profits, painful.
[1] https://news.ycombinator.com/item?id=46070915
[2] https://news.ycombinator.com/item?id=50145248
(non profit, coop, and muni grids can go to the bond market just like an investor owned utility to borrow for grid investment capital, so this is not an excuse for investor owned utilities to exist)
https://www.electric.coop/electric-cooperative-fact-sheet | https://www.electric.coop/wp-content/uploads/2026/09/2026_NC... [pdf version]
That’s because under capitalism, waste and inefficiency are touted as the ultimate evil. Making profit is the entire purpose of the whole system, so it’s inherently good, and “the right thing”.
Especially in the US, even talking about a reduction in profit is akin to blasphemy, and quickly gets one labeled a quack.
Just like China is cramming down legacy auto export TAM through their EV exports (BYD has surpassed Ford in international sales as of this year, as is constrained by not having enough marine vessels to export more), solar and batteries will come for investor owned utilities as well.
[1] https://ember-energy.org/data/china-cleantech-exports-data-e...
[2] https://www.iea.org/reports/solar-pv-global-supply-chains/ex...
My comment was about a lot more than just utilities. Healthcare, education, transit, etc etc.
At the low end, the GAO estimates of federal spending, 3-7% is fraud, 3% is improper payments, 7-10%+ is legal but wasteful (e.g. zombie programs) - totaling 13-20%.
In the middle, DOGE (don't smite me, just citing multiple sources) estimated 30-33% was waste.
And at the high end, the American public according to Gallup polling perceives 59% to be waste. https://www.cato.org/blog/americans-say-federal-govt-wastes-...
From that, NEE pays 43.72% in dividends.
So we can say that 17.64% of the amount paid for energy to this company is wasted in dividends ALONE.
Just to put some numbers on the waste on the private side.
The American public is stupid and wrong and their perception is not useful here. They will believe the government wastes 50% of every dollar because they have been told that, even though it's just stupidly wrong.
The GAO is actually the only information you provided. They are trustworthy and happy to be critical of every administration, and they don't get enough love for their important work.
I don't know if you realize this, but 3-7% literal fraud is actually a pretty good number for a very complicated system. 15% "waste" where it's hard to even define what "waste" is is also a good number.
Visa and Mastercard accept far higher for a far simpler fraud profile.
Also you said "This guy thinks waste in government is only 15%" and then the only data you provided has to wave many hands to get up to 13-20%. What the hell man?
Under a government-granted monopoly, that threat is legally banned (except for maybe water trucking)
Because the bad has to be unrealistically bad before someone can compete nobody sane will.
Bad water or water service is not unrealistic.
It took FIVE YEARS for Flint Michigan's water to be re-declared "safe to drink without a filter." The solution involved FEMA and the National Guard.
That can't have been the best way.
In your example no one is going to dig a rival pipe because you can't just go around installing pipes under other people's roads and land. The permission to do that is granted to a single entity by the government, further reinforcing the natural monopoly. There is no situation where it is economically feasible to lay more pipe when you have no right to do that.
This is why we say utilities are a natural monopoly. If you have the pipes/wires in place and even a little paid off you can undercut and competitor until they are bankrupt.
I mean, both sides claim to have the better quality, so let's see who actually has it.
The truth is that the efficiency argument is just a fig leaf for the true ideological motivation to sell off publicly owned assets. The true reason is at the core of neoliberalism and it is essentially to increase investment opportunities for people with capital. Nothing (not even childcare) can be provided by people for people. It must be offered up to 'the market'.
Governments don't have profits. In the last 30 years, they've all racked up massive amounts of debt. What do we call what the guys who run our government make since they only have debt (and not profits to speak of ...).
I think a big part of that number is risk, dividends are tied to risk too.
The very idea of investing is that you take risks in exchange for profits. That is, if it fails, you lose your capital, if it succeeds, you become richer. A public provider doesn't work the same way, risk is covered by taxpayer money. If it fails, taxpayers foot the bill, if it succeeds, cheaper service.
From that, NEE pays 43.72% in dividends.
If we multiply these two numbers, we end up at 17.64% in dividends ALONE.
23% is not a really big number by a long shot.
Their other subsidiary is NextEra Energy Resources, which is not a regulated utility, and has 60% net margins. This business is basically an unregulated competitive wind and solar developer. They take full risk if they can't sell their power, but can build wherever they think there are customers willing to pay. 35% of their power is sold straight to industrial customers at private contracted prices, the rest into the grid.
The study even points this out as a foot-note but then focuses on rate of price increase versus nominal price. It should not come as a surprise that in areas where utilities are less abundant the price will increase faster than in areas where that same utility is plentiful.