I used to live in a small town in Michigan which had city provided power using a dam. It was inexpensive and highly reliable. But every couple of years the big power company in the state would try and get the city to sell them the utility.
After I moved a city council for whatever reason ended up selling. As a result the cost of electricity immediately doubled and power outages occurred regularly due to reduced maintenance. I don't know what they spent the money on that they received but it was a very poor decision that I have to believe they regret.
hansvm 33 days ago [-]
I've lived in a few dozen cities (most very, very rural) in the US, and The Bay has, by far, the worst electricity out of any of them. We have longer outages as a planned practice than I'd have from ice storms knocking down half the forest or waves partially flooding the town.
As an outside observer, the fact that PG&E can lie to the state and request money for maintenance, subsequently sending that money to shareholders, looks like a likely candidate for many of the problems.
It's especially annoying that it's the lowest quality power while it's working (compared to a pure sine signal), has the highest count of days with some power blip, the highest number of full days without power each year, it's 2.5x more expensive than anywhere else I've lived, and they don't even have snow or ice or the same levels of wind and rain as the other places with better power. Plus they're servicing more people per square mile. It ought to be more efficient.
Maybe CA really is special somehow, but it looks like ordinary corruption.
a123b456c 32 days ago [-]
Don't forget SDG&E/Sempra. San Diego locals hate them with a passion. It is crazy that an area with such abundant solar generation and environmental concerns should have such expensive power.
tekknik 31 days ago [-]
Some areas served by SDG&E have community owned power generation and SDG&E handles delivery. The price SDG&E charges for delivery is usually 30% more than generation costs.
Power bills increased after switching to community generated power.
krallja 33 days ago [-]
Californians blame it all on Enron, but that can't be the only reason, right?
zmgsabst 33 days ago [-]
The Enron scandal was 24 years ago, which is a generation ago — almost two.
I’d guess the problem is more endemic to their political system.
mschuster91 33 days ago [-]
The thing is, large scandals can have an aftereffect that lasts for decades.
Berlin for example had a massive bank collapse in 2001 under the Conservative government that ended up placing the state of Berlin into billions of euros worth of debt and financial risk. The succeeding SD/Left/Green triplet coalitions had to fire-sell off many state-held assets like the water utility (that ended up a disaster on its own [2]) and especially a huge amount of residential real estate, which is now contributing to the insane rent explosions in Berlin.
To this day, Berlin hasn't recovered from all the penny-pinching of the last decades.
Much worse. I am really sick of British people (those who have not lived abroad or had really experience of other countries) thinking the UK is uniquely bad. Its in fact better than than most places in most ways. Why do you think people want to immigrate here (including lots of highly skilled people who can pick where they live, and lots of people from other rich countries)? Why do you think so many of us with dual nationality who can just go somewhere else as a right live (ship our stuff and get on plane, whenever we like) here?
We have not had anything on the scale of what the GP describes of a city going billions into debt - even Birmingham is orders of magnitude less bad.
The government sold assets, but not at fire sale prices. I do not think selling utilities was a great idea, but its not as bad as either what GP describes, nor the "small town in Michigan" example at the top of this thread (when did you last experience a blackout in the UK?).
DrillShopper 32 days ago [-]
And then they killed the nuke plants for coal because they're scared little babies.
mschuster91 32 days ago [-]
Nuke had no future in Germany. The plants haven't had security maintenance in many years because it all was relaxed due to the pending shutdown, the plants were many decades old, we don't have a place to store spent fuel (unlike Americans who have ample desert space where no one is ever gonna be bothered), new fuel comes to a shocking amount from Russia, constructing new plants takes >>10 years and many billions of euros.
DrillShopper 32 days ago [-]
The nukes not having a future in Germany is completely down to the Green Party and their pathological obsession with killing nuclear power.
They organized and succeeded.
Where was the opposition? Is the entire German environmental movement beholden to the Green Party?
eliaspro 30 days ago [-]
The final decision to shutdown the nuclear plants happened under a conservative CDU-led government.
And even it they don't seem to have memory now of doing so, I applaud them for this specific decision back then.
mschuster91 32 days ago [-]
Germans never really liked nuclear power from the start, all NPPs drew massive local opposition that was by far not just the back-then new Green Party.
DrillShopper 31 days ago [-]
Is the term for NIMBY in German the same as it is in English?
viernullvier 32 days ago [-]
There have never been any grid-scale nuclear power plants in the state of Berlin. I don't see how this statement relates to the prior discussion in any way other than vague geographic proximity.
cinntaile 33 days ago [-]
20-30 years is 1 generation.
ahoef 33 days ago [-]
There are genetic generations and cultural generations. I think they mean the cultural generations.
theGnuMe 33 days ago [-]
The deep Texas freeze was the same thing.
taneq 32 days ago [-]
You guys are getting full days without power? That’s disappointing. I’m in Australia and since moving a decade ago to a suburb with underground power, I think we’ve had maybe three or four outages that lasted long enough to notice, and all were fixed within a few hours.
nasmorn 31 days ago [-]
I frequently visit a farm in Austria on the very end of a rural transmission line that can be cut during storms by tree fall almost every year. I don’t think they have ever been without power for a full day. In Vienna if average something like 8min a year
tmnvix 33 days ago [-]
Perhaps I'm too cynical, but somehow I doubt that those with decision making power that were in favour of selling at the time regret much.
Our modern political economy is almost entirely focused on ensuring that everything that can be sold to private entities (read, the market) is. In this ideology the sale would be viewed as a success regardless of any practical downsides.
ksec 33 days ago [-]
>In this ideology the sale would be viewed as a success regardless of any practical downsides.
In other places on earth, selling public utility requires the company to operate at similar or better level of services previously provided while retaining the cost. And those deals are mostly regulated, penalties when not meeting them.
And it used to be, may be in rare cases the people in Government making those deals actually knows what they are getting out of it, so the contract are all well written.
Now it seems they are selling because 1. They dont have money. 2. They are running it poorly. 3. They are bribed or have incentives to sell it. All with no caring of how the people they serve were getting any good value out of it.
econ 33 days ago [-]
I would argue that if something may not fail you can only pretend to privatize. You only privatize the profit during the good times.
Our railroads paid a nice 300m in divident every year then corona came, people were told to stay home. You can guess who had to pay for the lack of travelers.
The most silly are ISP's. The prices in each country depend on how much people can pay and what you get for it is rng
philjohn 33 days ago [-]
Privatize the profit, socialise the losses.
The one privatisation I believe the UK got right was British Telecom.
We now have a strongly regulated infrastructure side called OpenReach - the price they can charge for last mile connectivity is limited, and as such we have a load of different ISP's which either compete on tech and service (AAISP, Zen) or cost (PlusNet et al).
And then a proliferation of alternative last mile providers has also occurred - I now have the option of 900/100 FTTP from OpenReach based suppliers, 1130/104 DOCSIS from Virgin Media and 900/900 FTTP from CityFibre based suppliers.
I'm paying £40 a month for the latter.
rsynnott 33 days ago [-]
This is partly because the _early_ days of private BT were so bad that they really had to regulate, hard. Openreach didn’t come into existence for more than 20 years after the privatisation of BT, and it happened because the state required it to happen.
ksec 33 days ago [-]
It is one of those rare cases where Government actually knows where the monopoly could get into and formed OpenReach. Probably worth a submission on its own [1] but UK is slowly and surely getting all the FTTP roll out.
Hopefully there will be enough push to get 1Gbps Connection to every home rather than settled on 30Mbps.
[1] EXCLUSIVE: January 2025 update on broadband availability across the UK, nations and regions
> I would argue that if something may not fail you can only pretend to privatize. You only privatize the profit during the good times.
You can straightforwardly privatize things that can't be allowed to fail. Power generation is a decent example: If you have a hundred independent generating companies that all sell into a live auction market, they have to compete with each other which keeps prices down and the market as a whole remains reliable because there are many independent suppliers using different generation methods and if any one of them experiences a failure you can immediately switch to the others. The market has the incentive to be able to supply even during grid stress because the price will go up then, so suppliers with reserve capacity make back their costs for keeping it in reserve.
The problem comes when there is corruption. Instead of having a competitive market, the contract is assigned to cronies, or a lack of antitrust enforcement allows the market to consolidate until the suppliers are a cartel. Then, since competition is thing that gives privatization its advantage, the lack of competition causes the public to get screwed.
tofflos 32 days ago [-]
There can't be a competitive market. The entity that operates the grid has a monopoly on all customers in the area. So I would say entities that govern grids fall in a can't-be-allowed-to-fail-category while entities that govern generators do not (unless they buy enough generators in a region to effectively become a monopoly).
AnthonyMouse 32 days ago [-]
If you had a monopoly generating company and it failed then the power goes out even if the grid is up. It's just as important as the grid, but it's amenable to competition.
"Operating" the grid isn't the natural monopoly either. The natural monopoly is actually the physical space beneath the grid, i.e. the roads. If a storm knocks down a pole or some transmission lines need to be upgraded you could put out bids to any number of companies to come and do the work. If customers want to buy power from a generator, the grid is used to deliver it, but that doesn't mean the grid operator has to be an intermediary between the supplier and the customer instead of a vendor of the supplier paid to deliver power. It's not even obvious that they should be paying per kWh instead of funding distribution through taxes in the same way as the roads, since a well-functioning grid should never exceed peak capacity but using otherwise-idle transmission capacity has no variable cost.
And then what's the natural monopoly? Just physical ownership of the infrastructure, and some accountants to predict when demand is about to outstrip supply and bids should be put out to expand capacity.
econ 31 days ago [-]
Damned if you do, damned if you don't.
I didn't get to bid in an auction. Providers bid until they had enough then the price was fixed based on the most expensive source.
We also designated a windy chunk of government land next to my city to private wind energy. Besides land it needed a bit of subsidee to spin them up.
Big turbines happened that provide enough power to run the city.
Not that the city didn't have the money to do it themselves. Its dwellers could also easily afford it. That's just not how things work around here.
Mysterious actors blew up some pipeline some place in the north and the highest bit went up dramatically.
It didn't fail, people just couldn't pay their bills anymore.
The market was very good at increasing profit when demand was larger than supply.
One could imagine worse circumstances with a larger effect.
AnthonyMouse 31 days ago [-]
> The market was very good at increasing profit when demand was larger than supply.
That's what it's supposed to do. Then in the absence of regulatory barriers to entry, new suppliers enter the market to capture those profits, until the profits aren't so big anymore because there are more suppliers.
One of the things that messes people up here is that they want consistency but don't want to pay for it. You have a competitive market which is providing low prices until there is a supply disruption. Then prices are temporarily high. If you wanted to you could have bought insurance or futures etc. so that you would always pay a consistent price, but then you'd be paying a higher price than the market on the days when supply is good so that you could pay a lower price when supply is low. People then complain about that too, but those are your options; if you pick the "don't buy insurance" one then you're exposed to events, but you should be the one who gets to choose.
And maybe if you're poor you don't want the insurance, what you want is to have the lower price most of the time and cut back your usage when the price is high. But either way, that should be something you get to decide instead of something somebody decides for you.
econ 29 days ago [-]
Yes, markets are suppose to kick you when you are down.
My gut says it is like needing for example a car. You could rent or lease or you could buy one in cash on on credit. Each choice makes sense to someone. If it is to be a collective choice/deal it should be cheaper and I see no reason why it can't offer the same options. We have this weird tendency to shove all collective arrangements in governments boots where we know the outcome will be something stupid, turn into something ridiculous or both.
I really want to see gov processes strictly defined. Then we can have the government set up entirely independent bodies that strictly follow their charter. Ideally it pays no taxes, no one works there, no one owns it. I might even like blockchain for this purpose. We want 1234 new lease contracts for 2026, any company may bid, customers press accept. The one most accepted gets to provide the [proverbial] cars.
It seems doable.
specialist 30 days ago [-]
> You can straightforwardly privatize things that can't be allowed to fail.
What are some examples of successfully privatized utilities?
32 days ago [-]
account42 31 days ago [-]
Where are those mythical other places?
Ekaros 33 days ago [-]
I think this is just the end-stage failures of social democracies. Fund the things now, even if it means selling anything that can generate slight profits in long term. Or provide basic services at reasonable rates. Eventually everything is sold and out sourced, money has been wasted on buying votes and the debt is maxed out. Then the system will fail...
treyd 33 days ago [-]
It's the end state of neoliberal policies. That's the ideological tendency that actually has the obsession with markets and strangling government capacity to do anything other than be a spigot for tax dollars. Scandinavian social democracies aren't perfect but they don't suffer from these entirely predictable problems to nearly the same degree.
animal_spirits 33 days ago [-]
I think one problem is that most people confuse private ownership with "the market". Just because a utility company is owned and operated by a private entity does not mean it is influenced by market forces. Utilities fall under a natural or technological monopoly. Due to space constraints it is not desirable or efficient to have multiple companies run pipes, cables, or other infrastructure alongside each other to compete. There are no competitive forces; there is no market. Publicly run institutions or privately run+ publicly regulated institutions better serve the needs of the people in these conditions.
forgetfreeman 33 days ago [-]
I think a related thing that many people get confused by is the idea that market forces even exist. It's very rare these days to find industry segments where participants actively compete on quality or price. The whole idea is a holdover from how business was done 40 years ago.
_DeadFred_ 33 days ago [-]
And with today's investors just buying funds/picking some 'group' on the 401k website, they aren't investing in a company, counting on receiving dividends from the company for the rest of their lives, and therefore forcing the company to be healthy. Instead they are counting on the stock going up short term, something totally different than buying and holding for dividends. And they just keep putting money into the generic pools of XYZ stock fund, again not a specific stock that they then hold accountable for anything. In fact they can't even punish a specific company by selling it's stock, only an entire ETF or 401 fund that the company is buried in.
And then there's dark pools. Trading isn't even done on the market anymore.
maest 32 days ago [-]
> And then there's dark pools.
This is such a non-sequitor, it undermines your entire post.
dgoldstein0 33 days ago [-]
market forces do exist. But it varies highly from industry to industry and product category to category.
Food:
- restaurants definitely compete with each other, mostly in each local area
- and within that, different slices of the restaurant business more directly compete, e.g. fast food is more competing with each other than fine dining.
- BUT: we have a huge problem with a lack of competition in the supply chain driving prices up for everyone, at least in the US.
- Groceries are similarly impacted by supply chain monopolies
Smartphones: high end smartphones are a oligopoly: - Apple vs Samsung vs HTC and several other tech companies producing phones; Apple definitely commands quite a bit of a premium, as do some of the nicer Android phones. But on the whole, the companies really are fighting to one-up each other with better features, battery life, etc. - quality is improving, even if the price is over-charging vs the ideal competitive market. Low end phones are even more fiercely competitive
Other electronic categories seem to show decent market dynamics; headphones, earbuds, usb peripherals, keyboards, etc. all seem very commoditized; there certainly are brands that try to command a bit of a premium based on reputation / marketing, but the cheap options are often good enough and definitely have a very competitive market. Big electronics like GPUs and gaming consoles though I think it's easier to start considering market distortions due to more monopoly power.
Of course there are no shortage of monopolistic practices out there, e.g. for utilities, collusion on rent, online retail (Amazon), textbook prices, medical care & pharmaceuticals, and even more mundane things like frozen potatoes and chicken.
---
The thing that bothers me most with the simplistic view that "the market will do it better" is that the whole premise of market forces giving the most efficient price assumes that (a) a commodity is being traded by (b) a large number of buyers and sellers, none of whom have any significant share of the market. Many markets either (a) aren't trading a commodity (e.g. iPhones and Android phones aren't interchangeable so Apple can command a premium price) or (b) have consolidated buying or selling to the point that they don't have the large number of independent buyers or sellers necessary to have the price be set by market dynamics rather than the monopolist or monopsonist. And the people promoting "let the market fix it" either are too dumb to realize that, or more likely are letting their rich friends make a quick buck or want to score political points by promoting smaller government.
animal_spirits 33 days ago [-]
Market forces do exist. I'm not sure why you think they do not. You are plain incorrect to claim that it is the exception for industries to compete on quality and price, at least in the U.S.
forgetfreeman 32 days ago [-]
How certain are you of your position? There are 3 major mobile telecoms in the country. Their service plans and coverage are roughly comparable. There are a handful of parent corporations that own fast food franchises in the country. Their product offerings and price points are roughly the same and all opportunistically raised prices after supply side disruptions from the pandemic were largely resolved. Most consumer appliances (regardless of brand) are assembled from parts made in the same factory. Similar features, similar life expectancy, similar price. Same with packaged food brands, clothing, furniture, building materials, this list is basically endless, and a product of a few decades of unchecked corporate mergers and acquisitions and the steady march of private equity into just about every market niche in existence.
Empact 33 days ago [-]
Services subject to natural monopolies are good candidates for being run cooperatively, by / on behalf of the market participants, so that there is not the incentive to extract rents via market power. Government-run may be practical from e.g. a fundraising perspective, but these services could be run wholly privately as co-ops.
AnthonyMouse 32 days ago [-]
In theory having the government run it should have the same effect. In practice what happens is that voters don't separately elect the utility's board and then the mayor gets elected on the basis of some school or tax issues and allows the government-run utility to become wasteful or corrupt.
What could be interesting is to have the local government found a co-op, i.e. they issue a bond to do the build-out and then hand the network to a co-op in exchange for a contract to pay the debt, essentially giving the co-op the backing of the government's credit rating for the initial build-out. Then the co-op board gets separately elected by its customers so they're directly accountable to the customers for any shenanigans.
BehindBlueEyes 30 days ago [-]
Easier said than done these days. We had a coop managing out drinking water with local government support. Being a coop excluded them from grants and eventually the board burnt out and gave up. Local government now operates the thing - you'd think they'd be accountable to voters but they can only get grant money with strings attached. They can repair a few pipes only if they install chlorination that no one wants and will add more maintenance costs because of pressure from health and safety - the provider must guarantee water is safe at the end point so boiling water, which everyone does here, is no longer acceptable apparently. There isn't a big enough population that increasing the cost of water would make a difference.
All that to say, voters here do care about utilities, and the coop solution worked for about 25 years iirc but it can't work in today's "one solution fits all" regulatory context anymore, at least where i live. Things are far from that simple in practice.
darreninthenet 33 days ago [-]
Depends how you do it... in the UK we have the underlying infrastructure government owned and we choose who to buy our electricity and gas from.
philjohn 33 days ago [-]
For electric and gas that works as it's all just accounting. Energy company A buys futures for has and electricity and it all gets provided via the grid.
For trains it's much harder - yes, there are two providers on the WCML, but they're not equal (one runs faster trains) and as such there's zero real competition.
AnthonyMouse 32 days ago [-]
These things are a choice though. The natural monopoly isn't the trains, it's the tracks. And it's not maintenance of the tracks, it's ownership of them.
So you have the government own the tracks, contract with a private company to maintain them. Then anyone can use the tracks, like anyone can use the roads. Private companies offer train service to the public. All they need is rolling stock and they can start selling tickets. You then get a market that looks like airlines, i.e. entering the market is a moderate investment (millions; buy rolling stock/planes) rather than needing billions to build the network itself. More popular routes get more suppliers, which turns into more frequent service. There is plenty of competition because rolling stock is mobile and can easily be reassigned according to customer demand.
lukegb 31 days ago [-]
Open access rail operators are not permitted to compete with franchisees (on the same routes/proposition) - there's a test that is applied before granting a license to ensure that the services will be "not primarily abstractive" - that is, that the operator will generate new revenue rather than simply taking away from the franchisee.
darreninthenet 33 days ago [-]
Is the slower train cheaper? If so, isn't that a competitive market choice?
anticensor 33 days ago [-]
The slow train has more stations to stop at, hence there is not a real choice for rural people.
jopsen 33 days ago [-]
Sure, they do we're just not as far along the curve!
That said, who is to say the trend isn't reversible some day.
Also let's not forget the selling to private operators does provide benefits, not always, it's not the magic fix we pretend it is.
wesselbindt 33 days ago [-]
I can't speak for the parent post of course, but what I think they might mean is this: social democracy eventually devolves into neoliberalism (or worse), which, as you rightly point out, is geared towards making life much, much worse for the many to the benefit of a shrinking few.
To see some examples of this, look at the arguably social democratic Keynesian US from the fifties, and where they're at now. Similarly for the United Kingdom. Labour used to fight for social democratic policies, and since the advent of "New Labour" (Thatcher's greatest victory), they're essentially a right wing party. For a much more harrowing example, look at Allende in Chile and the US sponsored coup by Pinochet.
In general what you see is that the social democratic status of a state is an unstable one. Roughly speaking, the people who would benefit from neoliberal policies happen to have a lot of money with which they can and do influence politics. There's campaign funds, lobbying, but much more importantly owning the media[1]. Propaganda is incredibly powerful (we are not immune), and it has been used successfully time and again to get people to vote against their own interests, such as abolishing social democratic practices.
[1] In the case of Chile, and for example Indonesia, the mechanism is much more violent, but the principle the same. Capital is spent to successfully influence politics in favor of capital.
wisty 33 days ago [-]
Neoliberalism fails because of what economists call "the theory of the second best". Neoliberalism fundamentally assumes that the best practical system is as close as possible to an ideal free market, but it's not, due to local minima (often ones we've already found!) often being better.
The best system is a free market, if possible. But the second best system may not be close to the best system, it may be a local minima that is very different.
A classic example is that small companies and no unions is theoretically best, but monopoly unions vs monopoly companies is the second best (since there's no single monopoly, so they negotiate something close to the theoretical ideal).
Free markets are best, but if the government is going to heavily subsidise and regulate the power companies (as they are natural monoplolies, so they either get regulated or they abuse their position) then maybe it's best to just cut out the middle man.
forgetfreeman 33 days ago [-]
I think it's very important to define who's being optimally served when declaring a market ideology "best". Free markets are demonstrably better at servicing capital, but I'm pretty sure that doesn't equate to optimum outcomes for the proletariat (why isn't there a better word for this, I can just see the redbaiting coming from a mile away).
walthamstow 33 days ago [-]
FDR's VP Henry Wallace used the term 'the common man' which I always liked.
AnthonyMouse 32 days ago [-]
> Free markets are demonstrably better at servicing capital
This premise is highly questionable. Certainly for competitive markets it's entirely false. Uncompetitive markets suffer largely the same failure mode as government bureaucracies, but it's not even clear that this is actually worse, because government bureaucracies are susceptible to not only charging bloated service fees for mediocre service, they can also be captured into diverting tax dollars to private cronies. Just because the government owns the real estate doesn't mean it's manufacturing its own trucks and networking equipment and copy machines, but as soon as it isn't, it's buying that stuff from the market and you need a competitive market or you're still screwed.
So what it comes down to is, you need a competitive market.
forgetfreeman 32 days ago [-]
If you find that premise highly questionable produce a cogent explanation for why real wages have been flat as a fucking strap for the last 40 years despite massive gains to GDP. Once you've cleared that hurdle your next task is justifying the current massively skewed (and worsening) income distribution in the US. Clear that bar and all that's left is justifying private equity eating everything from fast food franchises to the healthcare system.
Apologists love to complain that <insert problematic market outcome> isn't the product of a true market but that dog doesn't hunt. We have the economic system we have. We call it capitalism. It produces the above mentioned (and countless other) excerable outcomes. No excuses.
AnthonyMouse 32 days ago [-]
> If you find that premise highly questionable produce a cogent explanation for why real wages have been flat as a fucking strap for the last 40 years despite massive gains to GDP.
Cost disease induced by regulatory capture and a massive housing shortage induced by zoning regulations.
> Once you've cleared that hurdle your next task is justifying the current massively skewed (and worsening) income distribution in the US.
Poverty traps created by social assistance programs that put overlapping benefits phase outs on the lower middle class, causing them to incur oppressively high de facto marginal tax rates that in some cases exceed 100% of marginal income.
> Clear that bar and all that's left is justifying private equity eating everything from fast food franchises to the healthcare system.
This is regulatory capture again. Captured markets consolidate and then corporate raiders notice that the incumbents have a monopoly but aren't screwing their customers quite as hard as a monopolist can do. The underlying cause is government regulations insulating the incumbents from competition; private equity are the maggots that come to eat the corpse once the market is already dead.
Notice how there was "capitalism" in the 1950s but lower levels of corporate raiders or income inequality etc. So then you might wonder what has changed between then and now, and an interesting proxy is the number of pages in the US Code and Code of Federal Regulations.
> We have the economic system we have. We call it capitalism.
If you judge an economic system by what people call it, we called the thing that happened in 20th century Russia "Union of Soviet Socialist Republics" and the thing that happened in WWII Germany "National Socialism" and by this logic we shouldn't attempt anything called "Socialism" ever again.
But if socialism is the thing where you put the government in charge of the economy and capitalism is the thing where you limit the government from interfering with the market then socialism is the thing we've actually tried. How are you going to put e.g. the US healthcare system on "free markets" when it's the most regulated market in the US?
forgetfreeman 32 days ago [-]
> Cost disease induced by regulatory capture and a massive housing shortage induced by zoning regulations.
Ish. While regulatory capture is at the heart of most of the truly ass outcomes attributable to capitalism it's comical that an attempt would be made to assert less government oversight would in some way be beneficial. What, are we pretending the last several decades of blissfully ignored potential anti-trust cases, questionable mergers, etc. aren't the direct result of captured legislators being told to just sit on their hands?
Incidentally the "housing crisis" has nothing to do with zoning. Offshoring manufacturing and permitting AG conglomerates to bankrupt the majority of family farmers has resulted in rural communities being stripped of economic opportunities which caused a flood of economic refugees into high cost residential markets. Proof: pundits screech about a lack of affordable housing when ~8 million units sit unoccupied, many outright abandoned. In Other News: when zoning changes are made to permit the kind of multi-story mixed use structures that are hyped as a solution to the housing crisis what happens is they get built, the local market gets an influx of condos that nobody who lives in the area can afford and nearby housing increases in cost (a net reduction in affordable housing), literally the exact opposite of the effects advertised.
> How are you going to put e.g. the US healthcare system on "free markets" when it's the most regulated market in the US?
Most regulated...the what now? Private equity firms and healthcare megaconglomerates (oh I'm looking at you Duke Health) that are sweeping up private practices and hospitals all over the country. Without exception this leads to measurable decline in quality of care, and is the leading cause of rural hospital closure nationwide. This phenomenon is also driving up the cost of performing clinical trials as these outfits are savvy enough to intentionally target practices that perform trials. The resulting increase in fees to run a clinical trial are so steep they trigger fraud warnings in industry benchmarking software. Anyway, given we're the only industrialized nation who's healthcare system isn't entirely controlled by the government this claim seems pretty rich. One of several ironies here being freeish marketish healthcare produces some of the worst healthcare outcomes of any industrialized nation, at four times the cost. Wheee.
Put another way yeah the government is culpable only in the sense they decided to not actually govern, thus letting The Market run rampant.
AnthonyMouse 31 days ago [-]
> What, are we pretending the last several decades of blissfully ignored potential anti-trust cases, questionable mergers, etc. aren't the direct result of captured legislators being told to just sit on their hands?
Regulatory capture isn't just industry capturing the government so they can avoid regulations. They capture the government so they can control the regulations, and then use them to exclude competitors by increasing regulatory barriers to entry.
It's pretty hard to sustain a monopoly in a market with low barriers to entry because the entry cost is lower than the prevailing prices, and new entrants don't sell to the monopolist unless they're offered more than they could make from staying in the market, which is in turn more than the cost of entry. So entering the market stays profitable because you either make money by selling to customers or you make money by getting acquired. But the monopolist doesn't actually have an unlimited supply of money for acquisitions, so new competitors keep popping up until they run out of cash and then one of them sticks, or one of them is e.g. a co-op that isn't interested in selling.
To prevent this the monopolist needs the market to have higher barriers to entry. One way of doing this is to become so vertically integrated that new entrants would have to reproduce the entire supply chain to enter the market, and this is the case where you actually need antitrust enforcement, but it also isn't the common case. And it's hard for anyone to get a vertically integrated monopoly to begin with without the common case, because it's hard to monopolize the vertical before you have a monopoly in the original market.
The common case is the monopolist gets the government to pass laws making it more expensive to enter the market until new entrants are deterred.
> Offshoring manufacturing and permitting AG conglomerates to bankrupt the majority of family farmers has resulted in rural communities being stripped of economic opportunities which caused a flood of economic refugees into high cost residential markets. Proof: pundits screech about a lack of affordable housing when ~8 million units sit unoccupied, many outright abandoned.
This is just "demand is not always in the same place as it was before", it's only a problem if you constrain supply from increasing in the places where the demand has moved. This is the same reason you can have unoccupied units and a shortage at the same time, when the units aren't in the same location as the demand. The vacancy rate in e.g. Manhattan is at record lows.
Also, the shortage is by significantly more than 8 million units.
> when zoning changes are made to permit the kind of multi-story mixed use structures that are hyped as a solution to the housing crisis what happens is they get built, the local market gets an influx of condos that nobody who lives in the area can afford and nearby housing increases in cost (a net reduction in affordable housing), literally the exact opposite of the effects advertised.
This is the "induced demand" theory, which is rubbish. There is more demand for higher density areas than there is supply, so the price is high. If you increase the density of an area, you satisfy some of the demand, not only by creating that housing but by increasing the density of that area, which makes it more attractive because it can now sustain more local shops etc., so more people also want to move into the directly adjacent existing housing.
This does decrease the cost of housing, it's just that the housing that becomes more affordable isn't the housing directly adjacent to the new housing. It's in the place people left in order to move there.
What's happening is essentially this: Suppose you have areas with density levels 1, 2 and 3. Level 3 is the most dense, most desirable and most expensive. You increase the density of a level 2 area so it becomes a level 3 area by building more housing. The price of all three density levels goes down across the region, because there are now more level 3 areas available, so you don't have to bid as high to live in one, and some people move from level 1 and 2 areas to the new level 3 area, which makes more supply available there too. But that specific neighborhood used to be level 2 and is now level 3, so it, unlike the region as a whole, can increase in price, because the new level 3 price might still be more expensive than the old level 2 price.
And even that can be solved by building enough level 3 housing across the region so that the cost of level 3 housing falls below the previous cost of level 2 housing, but for that you have to build even more.
> This phenomenon is also driving up the cost of performing clinical trials as these outfits are savvy enough to intentionally target practices that perform trials. The resulting increase in fees to run a clinical trial are so steep they trigger fraud warnings in industry benchmarking software.
To take one example, the US requires separate clinical trials from the ones already done in Europe. There is no legitimate reason to even be doing them a second time, the European ones should be accepted for approval for sale in the US, but they're not. Because the incumbents like it that way, because it reduces competition and they own the regulators.
Another solid example is the entire concept of certificate of need laws. It's quite possibly the most naked example of anti-competition legislation in existence.
> Anyway, given we're the only industrialized nation who's healthcare system isn't entirely controlled by the government this claim seems pretty rich.
There are several industrialized countries with private healthcare systems that are all more efficient than the US system. The US system is notoriously corrupt and inefficient because the incumbents use regulation to inhibit competition.
mindslight 33 days ago [-]
You're still assuming that free markets will find the global optimum, which is equivalent to asserting P=NP and shrouding it in no true Scotsman.
Arrath 33 days ago [-]
Isn't part of the problem assuming that there is a single global optimum?
It seems there are at least two, such as in the case of utilities: best services or best profits for the shareholders. Again in the case of utilities we see time and again that these are mutually exclusive optimums as a privatized utility makes cuts to investment, build out, maintenance, customer service, or other aspects of the business in the goals of increasing profits, to the detriment of the quality of their service.
mindslight 33 days ago [-]
Yes, although usually when people are making these arguments they're imagining optimization across different entities and through time (relative to foreseeable events / probabilities). It then becomes much easier to write off conflicting higher-level subjective goals as not being actually valued in some imagined universal sense. The fallacy is rejecting the stickiness of human-made structure, even though that structure is all around us.
hgomersall 33 days ago [-]
It's hard to argue that as a society we should construct systems that have any goal that isn't optimising (in this example) services. If that aligns with maximising profits for shareholders, then great, if not then the system is not working as it needs to. IMO it's never really about free markets per se, but about competition. If the market is not delivering effective competition, then it should be made to do so. Competition is what aligns shareholder interest with customer interest.
AnthonyMouse 32 days ago [-]
> A classic example is that small companies and no unions is theoretically best, but monopoly unions vs monopoly companies is the second best (since there's no single monopoly, so they negotiate something close to the theoretical ideal).
This is a pretty bad example because monopoly unions vs. monopoly companies is extraordinarily bad to the point of being a plausible worst case scenario. The company is then free to run roughshod over its customers and suppliers and use its resources to capture the government and the union not only does nothing to prevent this but actually encourages it because then they can extract more of the monopoly rents for themselves. Then the normal tendency for the public to demand antitrust enforcement when met with an abusive monopolist is blunted by the union's support for the monopoly and prevents the monopoly from being toppled.
hgomersall 33 days ago [-]
It fails fundamentally because the underlying economic theory is built on a sink hole and constructed from cheese. There's pretty much no relation between the models that espouse neoliberal policies and reality, except those bits that were too egregious to ignore so were patched in as afterthoughts.
SoftTalker 33 days ago [-]
They’ve really only existed since the end of WWII and were rescued from that war by the U S so not really enough time to judge.
dartos 33 days ago [-]
Selling almost any state function to a private entity is almost the opposite of what social democrats want to do…
I think you mean neoliberal democracies.
fransje26 32 days ago [-]
> but somehow I doubt that those with decision making power that were in favour of selling at the time regret much.
They possibly even managed to buy a luxury car in the years that followed. Or went on holiday more often. Or somehow unexpectedly landed a nice and cush job at said energy company.
cscurmudgeon 33 days ago [-]
Don’t blame this on the market. A true market won’t have a heavy handed regulator in bed with a govt approved monopoly.
DrillShopper 32 days ago [-]
> A true market won’t have a heavy handed regulator in bed with a govt approved monopoly.
So the only way to have a true market is to count on the opposite of human greed.
Well hopefully that works out.
LtWorf 33 days ago [-]
A true market doesn't exist.
andy_ppp 33 days ago [-]
You can extrapolate this to why governments all over the world are effectively bankrupt, if you have no assets and instead rent them back from the rich it's extremely difficult to balance your books and the tax burden will go up forever. No amount of cost cutting will restore all public assets being owned by someone else and rented back at ever increasing costs.
The only governments which are not "bankrupt" are shitholes like Russia (and they only did it to prevent sanctions from harming their economy).
A healthy debt to GDP ratio (like what the USA has) is integral for a growing economy. Choke on it Austrians.
HPsquared 32 days ago [-]
There's also Norway, China etc, countries with productive SOEs. Those governments have debt but also significant assets.
threeseed 33 days ago [-]
In that video Brexit was not mentioned once.
Even though the UK will be £311bn worse off by 2035 because of it [1].
A decision that can't be blamed on the rich but instead is owned by the ordinary voter. Who then demands the same quality of life they had previously with the same taxation levels. It's delusional thinking and unfortunately no one has the political capital nor guts to correct them on it.
And it's a very different story here in Australia where none of what you/Gary said is true. The state governments are under financial strain because of huge investments in public transport infrastructure owned by the people.
So several problems with infrastructure - the developers always underquote and then once there are overruns the government is locked in and doesn't want to bankrupt the companies making these public infrastructure projects otherwise nobody would ever build anything. Additionally borrowing for infrastructure is often done through public/private partnerships which ends up with private companies owning the infrastructure and payments being made by the government for all sort of things in addition to rent i.e. changing a lightbulb costs £2000 etc. Government tend to get all the downside and the rich (who own the debt and the companies involved in building these projects) tend to see all the upside, look at the utility and train companies in the UK for example, and hospitals under PFI.
The money for these projects is provided by the wealthy through the purchase of government bonds.
Brexit is a problem sure, nobody denies that, but QE of around £1tn since COVID, most of which ended up with the richest (see asset price increases and cash holdings and world stock markets at all time record levels) is even more of a problem as it makes normal people and tax income relatively even smaller so borrowing and taxes need to be increased. And of course we don't tax the people whose assets have gone up enormously until they sell those assets. Quite often rich people borrow money against those assets instead of realising a capital gains tax event or various other loopholes.
I don't know too much about the specific case of transport infrastructure in Australia, but if the government owned them outright without attached debts clearly they would be assets rather than liabilities.
Chris2048 33 days ago [-]
Who "demand[ed] the same quality of life they had"?
DrillShopper 32 days ago [-]
The majority of Brits who voted for this on the promise that the UK would be richer and better instead of poorer and even more bigoted/fascist.
We can argue about the reasoning behind that, but that seems to be what most Brits who voted for Brexit wanted
hiAndrewQuinn 33 days ago [-]
I always like to put numbers to things. To put some numbers to this, the average residential rates for electricity in modern-day MI is around ~$0.20 per kWh. Louisiana appears to be one of the cheapest states in this regard, averaging around $0.12 per kWh.
As a selfish comparison point, the average residential rate for Finland, an EU country known for its recent nuclear developments (great!), is ~$0.25 per kWh, about 25% higher. France, well known for its pro-nuke approach, seems to average ~$0.28 per kWh, or about 40% higher. Germany, which has... Not done so, is around $0.40 per kWh, or about twice as high. Even Iceland, famed for its "almost free" geothermal power, seems to average $0.16-0.18 kWh for an ordinary residential connection - one must assume aluminum plants, etc can cut much better deals with the geothermal plants, through strategies like close colocation, of course.
These are very important factors to keep in mind, even if the absolute numbers seem small. Expensive electricity makes everything else more expensive as well. It touches every facet of our lives in a way not even food does. And making electricity cheaper probably benefits human welfare en masse in a huge way. It's a shame power management doesn't seem to be very attractive to recent EE grads like myself since it pays much worse and requires much more credentialing to break into compared to, say, WordPress development.
Gare 33 days ago [-]
> These are very important factors to keep in mind, even if the absolute numbers seem small. Expensive electricity makes everything else more expensive as well. It touches every facet of our lives in a way not even food does.
It has to be noted that in most EU countries electricity for business is quite cheaper than for households.
Correct, but this doesn't create as much of a wedge as you might suspect. It's also true in the US that commercial electricity tends to be 20-50% cheaper than the home delivered stuff. In the EU the additional tax burden means the difference is usually closer to 40-70%. Ironically, in this way, you could describe the EU as being far more business-friendly than the United States (by dint of being much more consumer-hostile, but hey).
Making the fundamental power generation cheaper is probably still the best lever a private actor can push.
wreckdropibex 33 days ago [-]
> the average residential rate for Finland, an EU country known for its recent nuclear developments (great!), is ~$0.25 per kWh, about 25% higher
Even if you add all those up, you only get max 15c/kWh.
As of today, you can get 2 year fixed price for less than 8c/kWh, even with that it only adds up to 17c/kWh, with most expensive transmission costs, taxes rounded up and energy price rounded up.
Maybe this is a "including everything" proce, i.e. transmission, connection fees, etc.
I currently pay a flat ~8c/kWh. I could save by using spot price electricity but as I don't use much, this keeps the monthly cost predictable.
pclmulqdq 33 days ago [-]
It sounds like your city was overprovisioned in terms of how much electricity they could supply, and you had the benefit of the cheapest power around (hydroelectric power is very cheap), so when you got plugged into the wider network that the power company was servicing, you got screwed. There's a good chance that power for neighboring towns got cheaper and/or more reliable after the deal given what happened with your power.
The town must have either been in huge financial trouble or on a privatization kick.
s1mplicissimus 33 days ago [-]
Your conclusion is a false dichotomy. A third option is that shareholders of the private company fattened up their profit margins.
maxerickson 33 days ago [-]
One potential reason I can come up with is the dam aging and becoming a liability.
The town may also have been putting other revenues towards the electric utility (so losing money on the service and billing).
It was probably just a mistake though.
My town charges about $0.11 per kwh, with a fixed monthly service fee making the effective rate for a small user closer to $0.20.
TheCraiggers 33 days ago [-]
I think you're spot on. Damn failures are on the rise, and usually it's due to the simple fact that maintenance is expensive and everything has a shelf life. A lot of these dams were built during the same time period and the cost to replace / maintain the aging infrastructure is tough for small communities to swallow. And they're all coming due at roughly the same time.
Selling to a larger company who hopefully has the capital to fix them seems like a bargain when compared to the cost of replacing a hydro dam (or even replacing it with a non-electric generating dam).
Of course, that does come at a cost, and it's probably spread across all rate payers.
sidewndr46 33 days ago [-]
its extremely unlikely that a town in Michigan was not connected to the Eastern grid
pclmulqdq 33 days ago [-]
Whether they were connected and whether they were selling the power are two different questions.
Affric 33 days ago [-]
> “the tax payers are being ripped off as asset owners because once the debt incurred to pay for the energy system is cleared they just give out cheap electricity and don’t seek profit. It is more efficient to sell, reinvest, and then let some massive rent seeker over charge you for something you once owned”
The economists who argue for this, only slightly paraphrased.
crazygringo 33 days ago [-]
I have never heard a serious argument that it is more efficient to sell and reinvest from a finance perspective.
The argument is generally that private companies are more productive than public services due to productivity improvements that are forced via competition. There's no such forcing function for a government-provided service, enabling (potential) waste and bloat, depending on governmental competence and oversight.
The correct counter-argument is that there needs to be competition for that to happen. If you have only one electric utility for customers to choose from, the argument is totally invalidated.
Affric 32 days ago [-]
Here’s [1] a report from the early days of electricity privatisation in NSW. In all honesty it’s been about a decade since I have read it closely but I would say it’s fairly serious and it does like efficiency as a metric.
Underproductive though is certainly simpler but my understanding is that it was inefficient because the asset owner charging an equilibrium price should in theory lead to higher overall production (obviously lack of competition hurts this).
Coming from cities in a 3rd world country that had government owned utilities, I would say my experience is the opposite. Usually the government is underfunded, the employees have no motivation and often are not even available to work thanks to their guaranteed jobs. Rampant theft of power and government have no interest to curb it due to vote banks. Unpaid dues by the government to energy producing companies resulting in bankruptcy of those companies. Political parties giving out free power and water to capture votes.
ugh123 33 days ago [-]
>but it was a very poor decision that I have to believe they regret
Unfortunately, I'm sure the folks that signed that deal were long gone before the problems started setting in
gnopgnip 33 days ago [-]
Alameda had municipal internet. In the 2009 financial collapse the city was facing bankruptcy and sold off the internet and cable to comcast. The alternatives weren’t great, the cost of borrowing at the time was high and cutting services is unpopular. The residents benefited from having the infrastructure either way. And this let the city keep municipal power, around half the cost of pg&e.
jt2190 32 days ago [-]
Why can’t you tell us the name of the town?
szundi 33 days ago [-]
These politicians are smart enough and can see through the first layer of obvious. They wanted to win the next election and this had nothing to do with that, but the money they could spend on shiny bullshit. Or they just got consulting jobs after losing it, nah, who cares. Was it theirs or what.
venkat223 33 days ago [-]
[flagged]
johngladtj 33 days ago [-]
That's not how the power grid works
ericmay 33 days ago [-]
How does it work in relation to the person you replied to? Genuinely asking.
mattmaroon 33 days ago [-]
Power companies in almost all cases don't supply power directly to homes. They supply it to the grid, and the grid supplies to homes. In states that are de-regulated, you pick your power company, you don't pick the servicer, and both charge you a fee. You pay one fee to the generator, one to the grid operator. (It may be rolled into one bill, but it could be going two separate places). The generator must sell to the grid power equal to what it sells.
I'd guess what happened is this small town generated power and let its people buy it at a reduced rate. GP just didn't get into that level of detail.
The author estimates that electricity prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%. That’s a good hint that this hypothetical is missing some important details
The article hedges against someone pointing this out by admitting that Walnut Creek is an unusually optimistic location and that PG&E is also recognizing large expenses related to ongoing infrastructure buildouts, but no solutions are offered for these caveats.
The hidden problem with projects like this is that once you roll these utilities into the city’s budget it’s too tempting to start dipping into taxpayer funds for needed improvements rather than raising electricity rates. When problems arise, politicians try to kick it down the road so it becomes their successor’s problem, or they try to offload the expense onto a growing debt load because that delays the problem to the next generation. It becomes easier to keep the highly visible rate down, but taxes might go up to cover the infrastructure costs instead.
So I’m skeptical. If there was an analysis that showed a drop in rates that was not 3X higher than the profit margins of the private utility I’d be more open to the idea, but as presented this feels like back of the envelope math that generates savings by ignoring all the details that didn’t make their way onto the envelope.
theptip 33 days ago [-]
> prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%.
This is addressed right at the beginning of the article. The argument is not that PG&E is skimming off huge profits, rather that it is structurally inefficient:
> Distribution: How much to get the power from your local substation to your house over local power lines. In PG&E's rate chart, they charge 20 cents per kilowatt hour for this. That just does not match up with how much it actually costs them to transmit power over local lines and keep the lines maintained.
> Everything else: Operations, maintenance, profit. This is where PG&E is actually seeing large expenses, because their coverage area is massive, it costs a lot of money to deliver power to rural customers, and they are also undertaking a massive project to underground utility lines in fire-prone areas.
The backstory here is that PG&E underfunded maintenance for decades while paying out substantial dividends to shareholders, and now that fires are killing lots of people, they have to go back and properly maintain their network.
Now, you can make the case that CA as a whole might not be better off if cities leave PG&E and the state has to subsidize rural power delivery even further, but I think the article is correct on the question that it tackles.
kevinburke 33 days ago [-]
I'm the author here. The cost savings come from not having people who live in cities pay for undergrounding lines and maintaining power lines in rural areas. Maintaining the city networks is much cheaper.
This is why Santa Clara, Palo Alto and Alameda's power companies can deliver power for half of what PG&E can. You can just copy their cost structure.
bunabhucan 33 days ago [-]
You said in the article "PG&E rejected this offer for being too low" but then proceed to use that as the baseline cost that drives the rest of the estimates, that doesn't make sense. If I offer someone minimum wage to do my job and they refuse, I don't start a spreadsheet to calculate my savings.
Boulder CO tried municipalization with Xcel and the gap between the city offer and Xcel position was very large. How do your figures look if you double the price and/or add in a decade tail of having to pay 25% of billing to PG&E?
The small munis you mention are in the same position as PG&E with respect to owning decades old poles and conductors with decades of life remaining. The incumbent has all the cards in this negotiation. An existing muni can do it cheaper for the obvious reasons you stated - legacy network, all the customers are close together. Buying the most profitable bits of the PG&E network at a price they would agree to would not be profitable.
kevinburke 33 days ago [-]
This is why I adjusted SF’s offer for population and then multiplied it by 50%, then used 400 million as the base for financing.
Financing at 4% interest is not the expensive part though. Even if the price was $1 billion it would be 6 cents per kWh.
I agree it would be bad if they had to fight in court for a decade! But you have to start somewhere and as I mentioned you might get a good outcome just from threatening to do it. My hope is the CPUC would force them to accept some offer.
bunabhucan 33 days ago [-]
In Boulders case the goal wasn't to strand rural customers with resiliency costs but to reduce emissions. Xcel moved in that direction enough that Boulder didn't need to municipalize. Owning poles and jiggling electrons would have allowed the city to do things like let homeowners access the 4% muni borrowing rate for solar loans that stay with the property via a tax lien. With the existing structure of public regulator and local monopolies, Xcel can't easily do anything "special" for Boulder without forcing poor rural places to share the costs.
rsynnott 33 days ago [-]
The problem is, if cities don’t pay for that, who will? Just abandoning electricity for rural areas isn’t _really_ an option, but it would likely be uneconomic without the effective subsidy from urban areas.
screye 33 days ago [-]
Story of America. There's a reason only this continent has excessive sprawl.
Ideally, rural areas pay up. Good forcing functions for change. Maybe people move closer together (similar to European villages) or they become energy-independent (solar panels).
If that's politically untenable, then I'd like to see the cost reflected as a city2rural subsidy. Cities get enough hate in the US. I'd like explicit recognition of their generosity.
xp84 31 days ago [-]
I could not agree more. Hiding true costs of our choices in other things breaks the ability of the market to signal what is an economic choice.
treis 33 days ago [-]
It probably is an option to go to solar & batteries these days. Especially when the liability from rural power lines is huge due to fires.
tomjakubowski 32 days ago [-]
Solar would make good use of the big advantage rural has, that land is dirt cheap and space is plentiful.
maxerickson 33 days ago [-]
The area I live in has utilities that service the small town population centers and a utility that services most of the outlying rural area. The rural operator is expensive, but not unaffordable.
Density including the towns is about 3.2 people per square km.
rsynnott 33 days ago [-]
Who paid for the infra, and how old is it? If it was inherited from a prior larger utility, this is the sort of thing you can get away with, for a while, until it needs serious maintenance. But ultimately spreading the true lifetime cost of electrical infrastructure over that sort of population density without subsidy is going to lead to absurdly high prices.
maxerickson 33 days ago [-]
It formed from smaller utilities ~1950. We have harsh winters and some small thunderstorms, but that's about it for weather.
Looks like people end up paying close to $0.30 per kwh. There's probably some cross subsidies coming from the state, I don't know.
rsynnott 32 days ago [-]
Yeah, I’d be _amazed_ if that isn’t subsidised in some way, whether via direct subsidy or risk equalisation fees from bigger utilities.
nocoiner 33 days ago [-]
Cool. Now you’ve just undone 70 years of rural electrification in the United States.
Optimizing for factors other than universal service is completely valid, but I’m guessing each of those municipal power systems pre-dated rural electrification and thereby get to somewhat free ride on the system more than anyone would reasonably allow Walnut Creek to do in the year 2025.
kevinburke 33 days ago [-]
Not just rural areas but places like Orinda and the Berkeley Hills where I will pay to underground lines at massive expense.
There is also a huge moral hazard problem where we make it cheaper than it should be to live in fire zones by subsidizing electricity and insurance. So people build a lot of houses in fire territory that burn down.
In the meantime we make it more expensive to live in the safe places. We should stop doing that
nicbou 33 days ago [-]
This is very close to the arguments Strong Towns make in favour of denser neighbourhoods.
The trouble is, if you end the subsidisation overnight, you have a big, big problem.
Gigachad 33 days ago [-]
Is this a problem though? Utilities will become more expensive for rural properties, but if those people are producing product that people need, they can just slightly bump prices to cover their electricity costs, which the consumers can cover with their new found savings on utilities.
The real benefit is that the people who don't have any reason to actually be rural, say remote software developers, will now have to either cover their costs rather than externalising them, or move to the city.
rsynnott 33 days ago [-]
Thing is, it wouldn’t be _slightly_. If you’re a power company who just does rural customers, you’re probably going to be looking at charging rates so high that people simply can’t pay them.
Gigachad 32 days ago [-]
They are currently being paid right now though. So it's possible for the population to fund it. The products being produced would go up roughly the same as the discount you got on power.
msandford 33 days ago [-]
It's probably more efficient for society to subsidize micro grids using solar and wind and batteries for rural electrification than to bury all the power lines that it'll take.
A $100 million project to bury the lines to 1000 houses is $100k per house which just ain't worth it. Not saying this is a real number but it could easily be if it's costing $0.20/kWh to do distribution.
toomuchtodo 33 days ago [-]
Rural electrification was needed at the time. In many cases, it no longer is (distributed generation, microgrids, etc vs large, distant generators having to transport power to residential load centers).
This is very similar to how Africa will leapfrog the legacy model with cheap solar and batteries.
In Australia, they have a model of colocating stationary battery storage in neighborhoods to balance buffer solar production locally for time shifting purposes (vs shipping that power far only to bring it back in the evening).
XorNot 33 days ago [-]
In Australia that policy was rolled out basically this year and is still in the trial stage.
toomuchtodo 32 days ago [-]
The fundamentals are proven (energy arbitrage, grid services, grid forming, all with battery storage). In Australia, the economics are very favorable considering high rooftop solar penetration rates. The trial will be successful, the debate is how successful.
eldaisfish 33 days ago [-]
this is entirely wrong. There is no world in which rural areas can substitute the power grid with anything you described. It is not possible - in the absolute sense - to match the power grid's reliability and stability with a bunch of local solutions. The cost is another matter but take Canada - the lowest electricity rates in the OECD.
The local solution to solve local problem absolutely works, but that is not what you are describing.
Africa is not going to substitute a continental scale grid with solar and batteries. That's just pie-in-the-sky levels of delusion.
KennyBlanken 33 days ago [-]
You..clearly know nothing about power grids, because utilities are deploying batteries precisely because they increase reliability an ease maintenance. And microgrids exist all over the US - a bunch are in Alaska and other very rural areas. Those communities have started adding battery storage systems to account for sudden load changes their generators can't handle, generator failure or maintenance, and so on.
Without them the grid is like a bunch of dominoes where a failure can cascade unless grid operators, or automated systems, react fast enough. Battery systems are like power firewalls; if the main grid goes down, the battery keeps right on chugging.
If circuit protection devices or an equipment failure happens on a main transmission line, the utility has hours to fix it, and meanwhile everyone has power. Ditto for maintenance. Need to replace that big huge switch that feeds part of the county? No problem, just...shut it off. Long as you're done before the battery bank runs out, everything's fine.
Right now you can end up with situations where a power plant will "trip" and go offline, such as when a large amount of load is disconnected due to a transmission line failure or substation failure. The grid frequency goes up if the power plants on the grid can't throttle back fast enough, and instead, to keep the grid from going over-frequency, the plant goes offline entirely.
If a lot of areas are on battery - those systems can be commanded to start charging to stop the plants from speeding up. If the grid goes dead, it's not nearly as big a deal, because the grid operators have more time to do things like sequence the re-connection of all those areas.
I'd imagine that with a bunch of battery systems distributed around a grid, they could potentially be able help black-start a plant if needed.
Battery systems also reduce the need for a transmission line upgrade; when demand is higher than the line's capacity, the battery system steps in. When demand is below the line capacity, the battery system charges.
eldaisfish 26 days ago [-]
i'd be careful telling someone that they don't know about power grids.
All the microgrids you describe provide basic needs. None power serious industry anywhere.
Batteries are a good solution for certain situations, not as a fix-all. All the batteries in the world can power a large power system like California or Quebec for minutes. That's right - minutes.
Profit margins don't reflect how efficiently they manage costs. It could as easily be the case the PG&E mismanages resources and costs more to deliver the same power.
darth_avocado 33 days ago [-]
Profit margins are low because they need to pay $20M in opex for the CEO’s bonus.
s1artibartfast 33 days ago [-]
Profit margins are set by the state utility control board. The board says 11% profit Max, so that is what all of the major utilities make. The challenge is that with a fixed profit percent, they have a heavy incentive to maximize open. You can spend $10 and make $1.1 or spend $100 and make $11.
It's a very problem to the healthcare market. Health insurance also has fixed profit, therefore there is a huge incentive to drive up costs. Better to make 15% on a $10,000 drug then 15% on a $10 one.
porridgeraisin 33 days ago [-]
This is the exact reason for the jacked up prices in many things.
asats 33 days ago [-]
If I'm not mistaken that's 0.08% of their revenue.
ceejayoz 33 days ago [-]
He won’t be the only person getting a bonus. Or a fancy office conference table. Or offsite team building exercises in Hawaii.
simoncion 33 days ago [-]
Or larger-than-they-should-be-due-to-neglecting-essential-maintenance dividends to investors.
gruez 33 days ago [-]
>Or a fancy office conference table
Even smaller order of magnitude than executive comp
>offsite team building exercises in Hawaii.
Source this actually happens to an extent that would materially affect the balance sheet?
You hire your buddy’s company as a consultant or contractor, too. At a sweet rate.
gruez 32 days ago [-]
>to an extent that would materially affect the balance sheet?
ceejayoz 32 days ago [-]
I'm not sure how to explain to you that the expenses on the balance sheet are made up of a lot of small individual things.
toomuchtodo 33 days ago [-]
Waste is waste. Squeeze it all out. Excessive management comp, share buybacks, dividends that could’ve been spent on infrastructure.
wisty 33 days ago [-]
Possibly due to overregulation.
The power company wants to cut corners. The government wants to prevent that. So there is constant lawfare between governments and highly regulated companies, with neither really caring if it leaves the customer out of pocket (since regulators can blame the bills on the company).
The company outsmarts the regulators so the regulators carpet bomb them with so much regulation that they hope it will plug all the loopholes. The incentives between them are simply too far apart. And with inbuilt market failures (due to it being a monoppoly) you don't have effective market mechanisms that allow the government to just set basic safety standards and get out of the way.
If you look a recent regulations that affect homeowner solar rates, it's quite the opposite, with the California Public Utility Commission being quite beholden to private utility wishes to the point of making home solar arrays much less cost effective so that utilities can be the only source of solar from larger grid installs. Large utility solar installs are inherently more cost efficient anyway, but the finger on inhibiting home solar was completely unnecessary yet still eagerly passed by the PUC.
heylook 33 days ago [-]
[flagged]
dang 30 days ago [-]
Please don't cross into personal attack in HN threads.
For what it’s worth, I just took the parent comment’s wording as metaphor.
MichaelZuo 33 days ago [-]
Is there any evidence for how they’re wasting such a huge amount of money year after year?
sb057 33 days ago [-]
The fact that they charge significantly more money than virtually every other utility company in the country (and indeed, within California) with comparable margins is pretty good evidence I feel.
MichaelZuo 33 days ago [-]
How is that evidence?
The expectations, regulations, and imposed demands, are not 100% identical across all utilities. So any combination of factors could lead to higher prices.
_heimdall 33 days ago [-]
Maybe I'm naive here, but isn't any company at a similar scale regularly finding ways to reduce profits on paper? Taxes add up fast when you don't have expenses to write off, and my understanding was that most effective ways to reduce tax liability would also reduce profit margins.
lotsofpulp 33 days ago [-]
One hint is that all the businesses that have the highest market capitalization earn the highest profit margins and profits. Dividends and share buybacks happen with those profits. If profits are less, then dividends and share buybacks are less, which means less money for shareholders.
It makes no sense to forego $0.80 in your pocket because you do not want the government to get $0.20.
lostlogin 33 days ago [-]
> One hint is that all the businesses that have the highest market capitalization earn the highest profit margins and profits.
I’m far from expert here, but is that too simplistic?
Where does perceived future value come into this? I’m thinking of companies like Amazon, which kept profit margins low while obviously having their shit together.
Amazon clearly has a mix of a high profit margin business (AWS and other services) with a low profit margin business (retail).
You will notice that most the top businesses are pretty much high profit margin tech and pharmaceutical businesses. Some oil and finance after that. And there are a few lower profit margin, but still large profit since the business is so large, but obviously, high profit margins and high profit is better than low profit margin and high profit.
MichaelZuo 33 days ago [-]
Why are you asking me when their financial statements are available online for you to read?
I don’t have some special insider scoop to know whether the numbers listed in the statements are real or fake.
_heimdall 33 days ago [-]
Well to be clear, my question there was more broad than any one company's financial statements.
I was asking a general question of the motivation for large corporations to avoid having profits on paper. I asked the question rather than claiming it as a statement because I am less confident in the details and want to raise the issue without presuming that I know exactly what I'm talking about on the topic.
MichaelZuo 33 days ago [-]
The same applies to every public company’s financial statements…?
That is assuming you’ve taken the effort to read the filings.
If your lookkng for easy generalizations that applies to all public companies then no it doesn’t exist. You have to put in the effort to read each individual statement.
_heimdall 33 days ago [-]
Feel free to not respond if you don't think my question was interesting enough to answer, or if you think I can do the research.
Its worth noting that reading financials still doesn't make me an expert in the area and I'd still be making a mistake to assume that means I understand well enough the games or motivations behind the numbers on a page.
jf 33 days ago [-]
The highest price that the city owned electric utility in Alameda, CA charges on the standard rate schedule is $0.29453 / kWh
Edit: Oh, this utility runs at a profit and has for decades. The profits have been going into undergrounding transmission lines
abathur 33 days ago [-]
Not trying to neg how you phrased it, but I wonder if the whole damn system would be a smidge better if we had strong well-worn widely-used terms to discriminate between profit-taken and surplus-reinvested (and maybe to further discriminate between unrelated r&d, related r&d, and direct performance/capacity/resiliency/etc. investments)
vlovich123 33 days ago [-]
Can you distinguish effective investment from ineffective? For example, paying competitively to attract and retain talent can be seen as an investment as well. And before you restrict it to just physical infrastructure investment, a non-trivial part of the cost of that infrastructure is in salaries and also how you manage everything at scale and I would think you’d want to incentivize more efficiency there too. This is why the tax code gets so insanely complicated.
abathur 33 days ago [-]
I'm a little unsure how to take you here, because I avoided dragging the efficacy of an investment into frame on purpose.
Maybe you just mean to tack on the idea that we could benefit from having better language to separate shrewd and incompetent investments, in which case I'm ~fine with some language to retcon the difference between merely lighting investments on fire and using them to drive an engine back on to those investments once we know the difference.
But if you mean to suggest that it's pointless for us to bother discriminating between profit-taken and investment-(effective|ineffective) just because we don't know whether the cat is dead or alive yet, then I suspect I disagree to the death.
(Edit: In case I'm being obtuse, I at least think I agree that "investing" surplus in hiring and retaining great employees is a surplus-invested, and not a profit-taken.)
vlovich123 33 days ago [-]
> (Edit: In case I'm being obtuse, I at least think I agree that "investing" surplus in hiring and retaining great employees is a surplus-invested, and not a profit-taken.)
So the executive compensation packages that many people hate on then are just a mechanism to reduce the profits of the company. And it’s not clear to me that Apple saving up profits so they can make larger investments without taking out loans is a strategy we want to disincentivize either.
My point is that designing top-down incentives at market scale are very difficult and while attractive are basically the central failure of central planning. Even setting aside the challenge of figuring out how to word the incentives correctly in a way that maximizes gain and minimizes gaming of the system (basically impossible) in a political system you also have to get buy in from people who don’t see it your way which muddles your ideal solution regardless of you being right or wrong. I’m highlighting that’s how and why we have the current tax system - it’s many many people trying to tweak and optimize incentives and curtail problems over a long period of time.
abathur 33 days ago [-]
(It feels like you are talking like you're gotcha-ing me, but I don't feel like I am trying to address any of these problem at the level you are focused on.)
I wouldn't say surplus held to be invested, even for many years to support a large capital project, is profit-taken. The surplus isn't being taken. (But, as before, I do still think it may be worth discriminating between related/unrelated, because this is somewhat relative. A large for-profit utility could extract surplus from most of its regional markets and plow it all into supreme resiliency for the city its headquarters is in...)
Designing good incentives or tax policy are very different problems than having slightly better vernacular for average people to use to distinguish between patterns of organizational behavior that throw surplus in a bin for a truck to take away and those that toss it in a compost pile for on-site use.
Accountants and auditors can classify inflows and outflows however they like--but I think specific problems like good incentives are more tractable when common people can leverage simple language to build the understanding and support that policy wonks will need to dial in incentives or tax policy.
vlovich123 33 days ago [-]
I’m confused. What do you think companies do with profits?
johngladtj 33 days ago [-]
Those terms exist.
The payout ratio is the percentage of net income actually paid out to equity investors.
For utilities it's around 50% of net income, though it obviously depends
xethos 33 days ago [-]
> Oh, this utility runs at a profit and has for decades
And yet somehow Americans will never see this and think "If only it were government-owned so the profit could be returned to the people"
About half the price of PG&E. This is in an otherwise PG&E area. People should be demanding their city handle power. It leads to half the price.
Aurornis 33 days ago [-]
> People should be demanding their city handle power. It leads to half the price.
My power is significantly cheaper than yours but it comes from a private company.
Picking random cities doesn’t tell us anything at all about costs or efficiency. Different areas have different costs and expenses.
You have to compare apples to apples.
AnotherGoodName 33 days ago [-]
This is a PG&E area as stated charging ~40c per kWh as stated by the post above?
musicale 33 days ago [-]
It's interesting that 1) there are PG&E areas in Palo Alto (such as the Stanford University campus) and 2) PG&E manages the transmission grid for the whole SF Bay Area.
Stanford endured lengthy PG&E power outages while the municipal utility continued to operate. However, the university probably has negotiated rates that are lower than what regular PG&E customers pay in Palo Alto.
33 days ago [-]
vlovich123 33 days ago [-]
What city in the Bay Area is that out of curiosity?
colechristensen 33 days ago [-]
>The author estimates that electricity prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%. That’s a good hint that this hypothetical is missing some important details
PG&E customers are paying very large amounts for the consequences of bad infrastructure causing wildfires and other legal costs which are being paid for with higher rates.
Right, but that’s my point: You can’t assume these costs disappear if the government takes over.
They just get blended into the tax bill.
colechristensen 33 days ago [-]
PG&E is a private company, much of the responsibility for their wildfire costs are the result of mismanagement of the risks.
Their costs get shouldered by their customers and their stock price. (they really should issue shares to pay their bills to dilute their stock price and cause their existing investors to lose money). In any case it's not going to get very willingly picked up by the government.
PG&E's liabilities aren't going to be put into taxes.
It's not the state government taking over PG&E, it's individual municipalities leaving the PG&E network and forming their own utility to buy wholesale electricity (or make some of their own) and distribute it to their citizens... resulting in a large reduction in cost in no small part because they no longer have to pay for PG&E's liabilities.
necubi 33 days ago [-]
He’s talking about local governments in places that have little or no fire risk. Should people living in dense cities be paying to underground power lines to rural communities hundreds of miles away?
ryao 33 days ago [-]
The author addressed that discrepancy:
PG&E's current rate structure has urban rate payers subsidize rural rate payers and people who live in wildfire zones in e.g. the Orinda Hills, who need substantial investment in order to receive power without sparking wildfires. This is bad policy - instead of subsidizing fire zones, it should be cheap to live in safe places and more expensive to live in dangerous places. Lower cost of electricity would reverse these trends.
jncfhnb 33 days ago [-]
No, their argument is sound. It’s just missing the point of utilities.
They’re saying that the cost of providing electricity to the cities, where everything is densely located and there are fewer trees and fewer overhead lines needing under grounding is lower so they should charge less to city consumers.
They imply that the bulk of the cost is delivering power to the richer consumers further out because there’s a lot of line miles that need under grounding. That’s probably accurate.
But utilities are restricted from pricing like that because you don’t want utilities triaging customers that are less profitable. The article here makes the argument that the far away and expensive customers are rich, therefore fuck ‘em. I’m not familiar with California but I doubt this is true across the board. There are surely notably rich communities far from the city but surely there are also poorer areas further from the city that are relatively cheaper because the commute is worse.
jltsiren 33 days ago [-]
Cross subsidies like that promote inefficiency. They are one of the main reasons why living in California is so expensive.
Utilities should be legally required to serve everyone in their area, but they should also be allowed to charge the real costs for the service. If the government thinks that's unfair to people living in rural areas, it's free to use tax money for explicit subsidies. But the subsidies should only be 70% or 80% of the excess costs, to give the people in expensive areas some incentives to find more efficient solutions.
It's even worse in housing, where developers are often required to build below market rate units at their own expense. It makes new housing less profitable, and less housing gets built.
jncfhnb 33 days ago [-]
Using tax money to subsidize higher rates on certain areas is roughly the same as just charging people all a slightly higher rate.
“The people” in expensive areas have literally no agency in finding an efficient solution. They don’t have any say about the utilities grid investments. In most parts of the country “these people” are also poorer.
jltsiren 33 days ago [-]
Economic efficiency comes from accurate pricing.
If grid power is artificially expensive in urban areas, people will install solar panels and batteries in situations where it doesn't really make sense. And if grid power is artificially cheap in rural areas, people will not install solar panels and batteries in situations where it makes sense. Thus incorrect pricing leads to inefficient investments.
Many economists even argue that the most efficient form of subsidies is cash that can be used for any purpose. Instead of getting cheaper power in rural areas, you should simply receive $X/month for living there. But the assumptions needed to make that claim are a bit too restrictive for many real situations.
jncfhnb 33 days ago [-]
Economic efficiency gains from specific power pricing are vastly undermined by the huge positive externalities of having electricity.
Solar panel and battery investments reduce your demand for power from the grid, and in many rate cases will reduce your energy bill, but they _won’t_ reduce the costs of maintaining the distribution grid assets connecting you to the grid that need to exist even if you only use them 0.1% of the time. People with solar panels are the worst offenders as they can end up paying nothing, or perhaps even net receive money, despite still requiring investment from the utility.
Accurate pricing of power is very very difficult. Whose energy should cost more? The 10k residents with 5 miles of overhead lines being undergrounded this year? Or the 1k with 15 miles of overhead lines that won’t be under grounded for 5 years? Are you prepared to impose a $50M capital investment cost solely on the consumers that use it? Uh oh. Turns out customers oppose an huge hike in their energy bills and are demanding you DONT underground their lines. Are you going to charge consumers extra because a car ran into a pole that’s specifically on their feeder? The risks of something like a forest fire affect everyone, even if it’s on a line that serves just one person.
This stuff is very complicated. The elephant in the room is that under grounding distribution networks in places like California is simply far too expensive for the kind of budgets they have.
phonon 31 days ago [-]
Why do you need to be connected to the grid .1% of the time?
A 12kW solar roof system with two Powerwalls costs less than $75k, with costs continuing to trend downwards, and large government subsidies on top of that. Amortized over 20 years it's reasonable, and much safer for fire prone areas. You can have a backup generator as well if you want to be totally confident.
jltsiren 33 days ago [-]
I've never really understood why undergrounding the grid is so insanely expensive in California. In Finland, installing a 20 kV underground cable costs something like €50/m + VAT, which is $100k/mile.
jncfhnb 33 days ago [-]
That might be achievable in rural areas in America
The issue is generally that American grids have WAY MORE overhead line miles than European grids
jeffbee 33 days ago [-]
Maybe, but it's also clear that rural electrification was a huge error. People should live in clusters of at least a handful of structures where it's practical and affordable to provision electric lines (and telecommunications), or they should be off the grid altogether. What we built in the 20th century was the worst possible thing: mile after mile of transmission and distribution equipment serving dispersed houses in forests. This should never have been built and we should not perpetuate it with subsidies: https://www.google.com/maps/@38.4638277,-120.656418,3a,75y,3...
sgarland 33 days ago [-]
This has to be the most confidently incorrect take I’ve ever read here.
The Rural Electrification Act not only brought power to rural areas, but also jobs to Americans when they were most needed, and countless follow-on benefits: increased farm productivity, longer lifespans and higher quality of life, etc.
It’s also not that subsidized compared to many other industries; the entire point of co-ops is purchasing something in bulk, with no one taking the profits. They get loans, yes, but the default rate on them is absurdly low.
And on that point, electric co-ops consistently produce reliable power at a lower cost than privately-owned utilities. I’ve experienced both, in multiple areas of the country, and by far co-ops beat everyone else.
This doesn’t even touch on the fact that the infrastructure enabled by the REA is also the only reason high speed internet ever made it to rural areas. Fiber everywhere should absolutely be a goal.
ty6853 33 days ago [-]
Its hilarious city folks think rural power is subsidized.
I recently extended a line about 1000 feet. For this, I paid $13000 -- primary transmission, poles, anchors, electricians, transformers, all at full rates. And it was a required donation, as in the power coop owns everything and it goes on public easement on to the next guy when they extend from mine. When they finished, I worked myself silly digging secondary transmission to where I was used on the property.
It is the other way around, rural people shoulder the costs of massive mileage of the grid extension that aid intercity networking. The costs are privatized but the benefits are socialized.
sgarland 33 days ago [-]
On the flip side, practically everything else about rural areas is subsidized. Most crops have price floors. Dairy is massively subsidized. Rural school districts siphon funding from cities.
Much / all of this is arguably necessary for national security viz. food production, but I dislike when people in red states (not saying you’ve done this, just making a tangential point) make comments like, “let’s see how long the city lasts if we stop exporting food.” Uhhh how long do you think you’d last without practically every aspect of your life being subsidized?
We need both groups in the country, and we need to support each other as each needs, but part of that dynamic being healthy means acknowledging that we’re receiving help.
jeffbee 33 days ago [-]
You guys are talking about a totally different "rural" than I was. Look, food in 2025 comes from gigantic horizontal factories and there is no way to avoid that. A food-producing region of California looks like [1]. An exclave of Libertarian weirdos LARPing as the Unabomber looks like [2]. It is the latter that is problematic in terms of provision of infrastructure.
The cost of installing that stuff is way more than 13k
ty6853 33 days ago [-]
Then they committed fraud.
jncfhnb 32 days ago [-]
I’m not sure you read that correctly. You paid far less than the total cost of installing that infrastructure.
ty6853 32 days ago [-]
The articles of my coop require someone extending a line to pay the full unsubsidized costs before installation.
If I underpaid the coop defrauded the other members by charging them instead.
J_Shelby_J 32 days ago [-]
Aren’t you making the case for the OP? That it cost so much to extend a line for a thousand feet… how about the thousands of miles of lines it takes to service rural users?
The same is true for all infrastructure in that it gets less expensive per user as density increases. The cost to hook up an apartment building to the grid is a few houses in a suburb but services 10x the people at the same revenue per person. The cost to service a single home in a rural area might wipe the revenue out from a dozen apartments.
Frankly, I’m sick of subsidizing the rural welfare crowd. Let them pay the market price for their roads and utilities if they want to cosplay as Galt gulchers.
ty6853 32 days ago [-]
Yes we have no public roads either for miles. Privately maintained easements instead. I built mine first with just an axe and shovels, later with a backhoe. Sewer is private septic. Water we had to dig a private well. The electric coop is paid for by users at full cost by their own extensions.
This works amazing as taxes and subsidies are basically zero. You pay for what you use.
lostlogin 33 days ago [-]
> This has to be the most confidently incorrect take I’ve ever read here.
It’s funnier if we alter it a little, is it more or less true this way?
>> It's also clear that rural voting was a huge error. People should live in clusters of at least a handful of structures where it's practical and affordable to provision government (and telecommunications), or they should be off the grid altogether. What we built in the 20th century was the worst possible thing: dispersed houses. This should never have been built and we should not perpetuate it with subsidies.
sgarland 33 days ago [-]
I don’t see how voting works as an analogy. Suburbs would be more apt. I live in one, but I’ll be the first to admit that there’s no defensible reason to do so beyond “I want to.” They’re typically a net negative for counties in terms of tax revenue, they perpetuate car-first infrastructure, they contribute to high housing costs, and they don’t produce anything of value, like rural areas can (farms, land preservation).
marcosdumay 32 days ago [-]
Well, people have to live somewhere, and that place will not generate a lot of revenue.
US suburbs have problems due to single-use areas and forced low density. But you will aleays have some area that don't pay a lot of taxes.
apercu 33 days ago [-]
That basically describes my area. There are 3 streets (2 connect, the 3rd doesn't). There are 11 houses on my (dead end) street and maybe 25 on the other two streets.
Because of this clustering - I live in a pretty rural area - but have natural gas and cable internet (only one option, so not that awesome).
But, I also have a well and a septic system. And I'm very thankful. As I was moving back to the US after 2 decades in a city, I did a winter with no high speed internet (used a mofi router with a SIM card as Starlink was overprescribed in the area) and propane for heat. It was a small house but heating with propane is crazy expensive.
chasd00 33 days ago [-]
Who cares about the way things should be when it comes to utilities. There’s no feasible way you’re going to cut power to rural communities and people. Deal with it.
thinkcontext 33 days ago [-]
That's what the article is about.
Nimitz14 33 days ago [-]
Interesting perspective. I guess even in very rural areas it would have pushed people to build villages. On the other hand people already were living far apart and lack of electricity meant they had to do massively more work. LBJ's biography has a section on this, explaining that life on west texas farms was incredibly hard without electricity (and as congressman LBJ worked very hard to expand that to rural people).
ghaff 33 days ago [-]
It sort of has. Lots of people you think of as living in fairly rural locations are still in small towns rather than the middle of nowhere.
hypothesis 33 days ago [-]
Eh, but we should not leave people without basics of civilization. Yes, it’s a subsidy, but benefits outweigh hoarding of wealth.
jeffbee 33 days ago [-]
But we wouldn't have been "leaving" anyone. All this garbage was built in the 1970s because we incentivized it with subsidized roads and utilities. If we hadn't established those subsidies, all of these people would have lived in the established towns of Jackson or Ione, upon which they are totally dependent anyway.
fooker 33 days ago [-]
> all of these people would have lived in the established towns
And I assume your food would be conjured magically?
jeffbee 33 days ago [-]
None of the people in the area to which I referred are undertaking anything productive. Food comes from farms, like always.
bbarnett 33 days ago [-]
Which are in rural areas. Which means the lines have to go there. Which means they pass less rural area to get there.
Rural areas aren't just a farm all by itself. Farmers need schools, stores, supplies, workers, you know, rural areas.
As well, when we electrified our nations, most people lived on farms. At the start of the 20th, as an example, most Canadians lived in rural areas. The reverse is now true.
This conversation is absurd. Hydro Quebec runs power lines through areas far more rural than California, through weather more severe and wide ranging, over greater distances, with more wild land, and just as much danger of fire. It does so at the cheapest rates, shows a profit, maintaining its lines and clearing vegetation.
PG&E is a pathetic company, and if people look outside of California, you can see how cheap rural electrification is
Really, cities cost more to electrify. Burying lines is mega expensive, stringing power lines on poles os quiet cost effective. You can easily run miles of lines, for the cost of a crew digging up a street and repaving.
Lastly, rural people pay for hookups. Each house often pays thousands per pole.
zeagle 33 days ago [-]
Re: Quebec hydro, I can’t think of an example of a crown corp or asset (see 407) being sold in Canada that has benefited the public with better quality at a lower price in the end. Privatization drives the need for shareholder profit to extract value more than efficiency so gains aren’t passed on. People contort themselves to think this isn’t the case… but the track record for power, automotive insurance, cellular service says otherwise… The only good argument I’ve ever seen of outside of pretending efficiency leads back to consumers is hidden externalities being covered by the government which is fair toy stability of a public service, averaging out costs for really isolated areas, and decent jobs with pensions is worth something too.
jeffbee 33 days ago [-]
Out of context Canadians are ... out of context. We are discussing utilities in California. California and Quebec could not be more different in terms of climate and fire risk. I can't wait for you to justify the claim that fire risk is the same in California and Quebec. Every place in Quebec can generally expect precipitation every other day on average and the normal number of consecutive dry days in California every year would shatter the same record in Quebec.
bbarnett 33 days ago [-]
Quebec is 4x as large as California, has far more forested land, and is often very dry in late summer.
It also has massive snowstorms, ice storms, which bring down vegetation, and ranges from -40F up to 100F yearly, depending.
We can nitpick on specifics, but by no means is California more rural, or more forested. Quebec is also far less populous, and has a far more hostile environment.
Hydro Quebec does well, because vegetation is cleared, maintenance is performed, and corners aren't cut.
Unlike PG&E.
jeffbee 33 days ago [-]
> Quebec is also far less populous
Isn't this my point? It is practical to punch transmission lines through any place. It is much more difficult, risky, and costly to maintain a fractal distribution network to individual customers in certain places due to geography and climate. If you parachute randomly into Quebec you'd be walking for a month before you met anyone. Same is not true in California.
bbarnett 32 days ago [-]
Not really.
Less populous can also mean more rural, and that was my point.
You talk about houses in the middle of no-where, and Quebec has that in spades. And it's not expensive, it doesn't cost, it's revenue generating, and not part of the problem.
If Quebec can do it, generate massive profits, and have mega-low rates, and do rural far better than California, then "rural" isn't the issue.
Don’t make shit up. Quebec fire risk is much, much lower than California. Both companies have to maintain vegetation around the lines. HQ’s risk of vegetation outages is outages for some customers on a feeder. California’s is the state burns down. It’s just not remotely the same.
I’m willing to believe HQ does it better but the challenges ahead of them are wayyyy different
jncfhnb 33 days ago [-]
Hydro Quebec‘s territory is nowhere near as vulnerable to forest fires as California’s.
JumpCrisscross 33 days ago [-]
The idea is there are parts of California where life is heavily subsidised. Paying PG&E as a low fire risk community is a net transfer out. (How the Bay Area hasn’t done its own grid à la Santa Clara is wild.)
gnopgnip 33 days ago [-]
Until recently I lived in Alameda with AMP for municipal power. Consumers pay about half what PG&E charges. AMP has a net profit and provides some revenue for the city each year. You can see the most recent financial statement here. https://www.alamedamp.com/DocumentCenter/View/1187/AMP-ACFR-...
Sacramento with SMUD is another success story. But there are some differences with economies of scale
fransje26 32 days ago [-]
> So I’m skeptical. If there was an analysis that showed a drop in rates that was not 3X higher than the profit margins of the private utility I’d be more open to the idea, but as presented this feels like back of the envelope math that generates savings by ignoring all the details that didn’t make their way onto the envelope.
That's possibly because of a strong underestimation of the actual indirect inefficiencies that come with shareholder profit-oriented companies. Every investment is seen not as a way to maximise profit in the long run, but as a direct decrease in shareholder profit, and should therefore be avoided at all cost (ha!) or postponed for as long as possible.
Strong counterexamples, admittedly not from energy companies, can be found in the remunicipalisation of the water supplies in Berlin and in some districts of Paris. Both came with drastic decrease of user costs, better water quality and a decrease of outages.
As well as Palo Alto's utility financial statement which is linked in the post.
bitmasher9 33 days ago [-]
I don’t think profit margin is the correct way to calculate their expenses. For one, it includes expenses outside of the municipality. For another, corporations are often okay overspending on executive compensation and other lavish business expenses for tax purposes.
Aurornis 33 days ago [-]
> For one, it includes expenses outside of the municipality.
Exactly. The cherry picked example in the article was chosen to ignore areas with higher expenses.
> For another, corporations are often okay overspending on executive compensation
PG&E had $25 billion revenue last year. How much do you think they spent on lavish executive compensation? Even if you could eliminate $100 million in compensation (doubtful) that’s still less than 0.1% of revenues. People overestimate the impact of executive compensation in large companies by orders of magnitude.
> and other lavish business expenses for tax purposes.
Again, you’re not going to find dramatic savings anywhere in the budget by cutting lavish business expenses at this scale. It’s noise. There’s also a persistent myth that companies can spend their way into saving money via tax write-offs, but for some reason my accountant tells me that’s not how taxes work.
gamblor956 33 days ago [-]
162(m) limits a company's deduction for executives (and other highly compensated employees) compensation to $1m per exec/employee.
Or in other words, companies aren't overspending on exec compensation for tax purposes. They're doing so because the board is not exercising proper financial control over the company.
apercu 33 days ago [-]
Right? I once ran a private company where there primary shareholders (who didn't work inside the organization) used to complain about the margins because they liked to calculate profit margin _after_ taking significant dividends.
lotsofpulp 33 days ago [-]
Your instance of an employer screwing you has no relation to an audited publicly listed business that has to not only follow accounting standards and is subject to the SEC, but also cannot sell their product unless the price is approved by the state.
apercu 24 days ago [-]
Fair. But if you assume creative accounting only applies to private organizations I have a bridge to sell you.
EduardoBautista 33 days ago [-]
Governments are often okay overspending on government contracts.
greesil 33 days ago [-]
What about
amluto 33 days ago [-]
> The author estimates that electricity prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%.
One detail is that PG&E is a heavily and (IMO) incompetently regulated utility, and their profit margins are more or less set by regulation. So they inflate costs to drive up profits, and one should not assume that the only room for savings is removing their profit margin.
shiftpgdn 33 days ago [-]
What is PG&Es generation cost vs administrative and legal overhead? The 11% margin isn't a good basis number. How is other states like Texas or Colorado are delivering at 10-12c/kwh ?
I do agree with your sentiment that city bureaucrats may be tempted to raid the energy business to pay for pet projects and other things. This can be protected against by segmenting the energy business into its own protected organization.
Aurornis 33 days ago [-]
> What is PG&Es generation cost vs administrative and legal overhead? The 11% margin isn't a good basis number.
Administrative and legal costs don’t disappear when the city runs it, so why does it matter? When the city runs a utility, nearly all of the costs associated with running a utility still exist.
If your mental model of a city-owned utility is that they’re going to generate power and sell it at cost with no administrative overhead, you’re really just assuming that administrative overhead will be covered by taxpayers.
Electricity rates down, tax rates up.
> How is other states like Texas or Colorado are delivering at 10-12c/kwh ?
Texas produces the most crude oil, natural gas, and also wind generated electricity. A quarter of the entire country’s wind energy generation happens in Texas.
Comparing electricity prices across regions is meaningless. Everything is too different.
roenxi 33 days ago [-]
The basic argument on Texas seems to be: "Texas avoided 75% of the costs in California by doing everything differently. California can't learn anything from them because they do things differently". That seems like a weak argument. California would have to do things quite differently to get a 75% cost reduction.
It is stereotyping, but it sounds like the sort of state that has a strong regulatory regime that would be quite controlling about what people can actually do. I note the irony that when Texas had a power outage everyone wanted much more regulation to force changes to grid maintenance, but when California spends 4x as much and PG&E skips on grid maintenance everyone throws their hands up because they can't call for more regulation and are out of ideas. The regulation doesn't seem to have dodged the maintenance problems but I'd bet it drives the cost up.
renewiltord 33 days ago [-]
One of the things we find with cost-plus contracting is that the team providing the service somehow has a great deal of costs. Ironically, abandoning this approach leads to hiring higher margin businesses which nonetheless cost less. A confusing phenomenon when one doesn't account for the fact that people optimize to get more money ceteris paribus.
nwiswell 33 days ago [-]
As of 1/1/2025 the residential average rate paid for the municipal utility of Santa Clara, CA is $0.175/kWh vs a residential average of $0.425/kWh for PG&E
PG&E has an 11% margin on those rates because they keep burning the state down and having to pay for it. Municipal utilities don't have to worry about that.
The only thing that could be seriously considered a downside is that Santa Clara, CA is now absolutely jam-packed with data centers that have low employment per sqft.
simonebrunozzi 32 days ago [-]
i guarantee you that PG&E is nothing like an efficient company.
bitmasher9 33 days ago [-]
This is absolutely a no-brainer for municipalities. The private companies are charging a premium that they return to shareholders and give to executives. Municipalities have excellent access to credit at rates significantly lower than the premium charged by utility companies. The residents get cheaper access and more influence in how the utility is ran.
The number of people that pay for-profit companies for natural gas (heat), electricity, and water in North America is absolutely bonkers. There is a specific concern about foreign corporations purchasing water rights in the American west.
I’m lucky enough to be in such an area. Note the city takes a bit of the above as profit too. Not that that’s a bad thing but it just goes to show how beneficial it is and how much more you’re paying by not doing it. Every city should do it asap.
xienze 33 days ago [-]
Yeah it might be easy for municipal electricity to win on price when the bar is set at $0.42/kWh. Out here our evil private company is charging $0.11/kWh. I have serious doubts any municipality anywhere could deliver power for half that.
pwrson 33 days ago [-]
Cleveland Public Power rates online are <$0.10/kWh in the summer and <$0.05/kWh in the winter.
bitmasher9 33 days ago [-]
I’m not sure where “out here” is, but $0.11/kWh is not the national low for municipal power costs.
chasd00 33 days ago [-]
City municipalities aren’t exactly staffed with the sharpest knives in the drawer. Few have the ability to manage the basics of street maintenance let alone stand something up like a utility. A fool and their money are soon separated, color me skeptical.
tokioyoyo 33 days ago [-]
That just sounds like a mismanaged city? Like obviously it might go wrong as well, just like how a private company might not have the sharpest knives.
gottorf 33 days ago [-]
Usually, for a private company, there is a forcing function (profit and loss) that incentivizes the management to ensure the knives are at least functional. Public employment doesn't have the same forcing function, and runs the risk of turning into a jobs program for the otherwise unemployable or a patronage network.
Of course, none of this is exclusive to one or the other.
bitmasher9 32 days ago [-]
Utility companies operate in a semi-monopolistic way, don’t aren’t subject to the same forcing function companies in more competitive industries are.
kkkqkqkqkqlqlql 33 days ago [-]
> City municipalities aren’t exactly staffed with the sharpest knives in the drawer
And private utility companies are?
kelseyfrog 33 days ago [-]
Of course it's cost effective for cities to start their own utilities, the economies of scale work in favor of urban and suburban electrification and maintenance.
What isn't effective is electrification and maintenance of low density regions although power monopolies like PG&E are required to provide service. The urban and suburban customers are effectively subsidizing the cost of transmission and maintenance for rural customers.
PG&E doesn't want their most profitable customer base[cities] to have public utilities because if enough do, their company becomes unprofitable and implodes.
This is exactly the reason we should do it.
xerox13ster 33 days ago [-]
Suburbia is subsidizing nothing. They are a drain on the urban core of every single city. There is not enough density in a suburban land area to even reclaim the taxes required to build the infrastructure to get there. And we stupidly continue to build new suburban development for new tax bases that don’t even reclaim the cost of building them. Then there’s no money to maintain them.
Urban development subsidizes everything.
Go watch some Strong Towns.
Fuck suburbs, unless they were built around a streetcar.
kelseyfrog 33 days ago [-]
I hate suburbs as much as the next person, but let's be realistic. Just because I hate them doesn't mean they aren't subsidizing rural power transmission - that would be letting emotions get in the way of rationalism.
arccy 32 days ago [-]
they might be subsidized less than the rural areas, but they're still subsidized by the urban core.
Aurornis 33 days ago [-]
> electrification and maintenance of low density regions although power monopolies like PG&E are required to provide service.
> PG&E doesn't want their most profitable customer base[cities] to have public utilities because if enough do, their company becomes unprofitable and implodes.
If the state forces PG&E to electrify expensive areas at the expense of higher costs in cities, their objections are reasonable.
If California forced a private company to electrify rural areas as part of the deal and then tried to change the rules to have the government take over the cheap areas, there would be easy lawsuits on the table.
UncleEntity 33 days ago [-]
Sure, PG&E implodes but then who manages Diablo Canyon and who delivers electricity to the unprofitable rural areas?
I left California last century but seem to recall the PUC(?) has a pretty tight reign on what PG&E does and doesn't do.
kelseyfrog 33 days ago [-]
Unfortunately rural inhabitants have been free riding on a grostesquely distorted market for decades. It may be hard for them to swallow the idea that they will have to pay market rates for transmission and maintenance, but they should also be the first to agree that despite this, it's ultimately a more fair order han getting what essentially amounts to a handout today.
kevinburke 33 days ago [-]
The flip side of this is that more and more homes are being built in fire zones in large part because we subsidize development in fire zones. It's a bad problem because of bad incentives. We should incentivize urban living
JCharante 33 days ago [-]
> Sure, PG&E implodes but then who manages Diablo Canyon and who delivers electricity to the unprofitable rural areas?
Hopefully no one manages them and that forces residents to move out and stop being a drain on society.
gottorf 33 days ago [-]
I assume the same should apply to, say, USPS, and the residents of Alaska and Hawaii should stop being leeches who can get letters delivered to them below cost?
kelseyfrog 33 days ago [-]
If you prioritize ideological consistency over pragmatics, sure. I don't; I just want a fair system for electrical services.
pfdietz 33 days ago [-]
This is where distributed renewable sources can apply. Supplying a remote home with solar and storage is probably cheaper than running a distribution line to it.
kelseyfrog 33 days ago [-]
I don't disagree. However, there is a positive feedback cycle lurking that can spin out of control faster than a behemoth corporation or government can react to.
pfdietz 33 days ago [-]
The underlying problem is that utilities are set up assuming their capital investments pay out over an extended period, but the technology is now changing over shorter timescales. The electric power industry is changing at a rate that it hasn't seen for over a century.
eldaisfish 33 days ago [-]
if your needs are fairly basic, sure. As soon as you add modernity, solar and storage for every house/region is cost-prohibitive.
pfdietz 33 days ago [-]
The average residential electricity rate in CA is $0.34/kWh. In these problematic locations, I'd expect the cost to be even more than this. Ground mount PV would be suitable here, so there would not be great problems with scaling. I think a PV + battery system should be competitive regardless of "modernity", whatever it was you meant by that.
To put numbers on it: for a 12 kW system in Chico, CA (a location at ~40 degrees N I chose arbitrarily) the NREL calculator at https://pvwatts.nrel.gov/pvwatts.php gives annual generation of 18500 kWh (40 degree inclination). For a lifespan of 20 years at $0.34/kWh this is $125800 worth of electricity. A 12 kW + 16 kWh LFP battery system costs something like $36K (+ installation and financing).
eldaisfish 26 days ago [-]
while your general point is valid, the problem with simulations and estimates is that they have some severe caveats.
The most significant is that modernity comes with immense demands on reliability and capacity. The solar estimates are based on averages. There will absolutely be times when your solar and battery system runs out of power. What then? What if you decide to buy an EV? Can you depend solely on solar?
You cannot replace the grid, no matter what the simulations tell you. The whole reason the electricity grid was created in the first place was to solve problems of local resource constraints.
roody15 33 days ago [-]
I am a city council member in small city (9,000) which owns and operates a municipal electric power plant. We have 4 large diesel generators, two large wind turbines and a few fields of solar panels.
It is nice having power on 24/7, if there is an outage we simply fire up a diesel generator and power is restored in just a few minutes.
We do have to buy power on the grid but also have times where we sell power back (summer, when people use AC prices go up and our solar panels typically generate excesss and profit)
The price of power is almost identical to those outside of the city. Honestly keeping as many derives local really has been a win/ win for our community.
abeppu 34 days ago [-]
The author mentions the cost of buying out the distribution network, and cites SF's failed attempt to do this. The author tries to figure out the price for Walnut Creek's grid based on inflation and population -- but the $2.5B figure this is based off was rejected by PG&E. The messed up thing is PG&E as a monopoly can set the price wherever they like -- and they can demand substantial continuing payments to connect to the grid so long as they retain it.
> PG&E continues to demand huge payments on routine power grid connections. For example, the cost to comply with PG&E’s latest requirements for the City to use public power to connect streetlights, traffic signals and other small loads would exceed $1 billion.
I think either we need the political will to use eminent domain to take the grid back (i.e. set the price through a legal proceeding), or we'd need to build a duplicate distribution grid and then abandon PG&E.
kevinburke 34 days ago [-]
Yes, the fact that PG&E rejected the offer is why I adjusted the figure for Walnut Creek's population and then increased it by 50%. The fact is muni borrowing is cheap - even if PG&E charged $1 billion we could finance that for about six cents per kilowatt hour.
I don't think the CPUC will let them get away with "we won't sell at any price" - I think the regulators would force them to sell at some price.
brian-armstrong 34 days ago [-]
PG&E surely knows that if it lets one city do this, then more will follow quickly. It will be left with the least profitable regions and cities that can't afford to/don't have the credit for this transition. That would ultimately leave the remaining customers in an even less affordable position.
greesil 33 days ago [-]
Maybe these expensive-to-serve regions need a different model of power generation.
brian-armstrong 32 days ago [-]
Possibly, but that's orthogonal to my comment. Point is that there will still be cities that have to shoulder PG&E costs not because they have fires but because they can't afford to purchase and maintain their own grid, or don't have the political strength to get it done.
JasserInicide 33 days ago [-]
Or living so far from civilization, especially in a state where wildfires have been part of the ecosystem for millions of years.
greesil 32 days ago [-]
Altadena isn't exactly far from civilization. The point isn't that wild fires happen, it's that maybe these little places should go "off grid" so everybody can get a lower price. Everybody but them probably.
abeppu 34 days ago [-]
> I don't think the CPUC will let them get away with "we won't sell at any price" - I think the regulators would force them to sell at some price.
Has the CPUC forced such a sale before? Functionally, if PG&E can just safely gauge what's likely to be out of reach for each city, they can name a price detached from reality and be confident of maintaining their stranglehold.
gvkhna 33 days ago [-]
Unfortunately most of the CPUC worked at PGE, the people that understand energy regulation are usually energy folks. And so the CPUC is typically quite understanding of PG&E’s pleas, they approved every single rate hike they’ve proposed. 5 times last year alone.
rsync 33 days ago [-]
Why use eminent domain to seize their garbage, crumbling infrastructure?
Instead, slowly build out, in parallel, the upgraded – which is to say, underground – infrastructure that PG&E refuses to build.
A community could do this opportunistically on a schedule that tracks the normal repaving of roads.
tokioyoyo 33 days ago [-]
Recent public infrastructure and construction history in the states is full of failures, missed deadlines and projects running over budget. Unfortunately this causes a loss of appetite when it comes to long term slow builds.
jncfhnb 33 days ago [-]
I’m not specifically familiar with PG&E but the whole point of a rare case with regulators is that they cannot set the price at whatever they want. They need regulatory approval of the rate.
vegetablepotpie 33 days ago [-]
The build a duplicate distribution grid is effectively what Ann Arbor is doing with its Sustainable Energy Utility, approved by voters in November [1].
Boulder CO tried to do this, but failed. After a 10 year fight, Xcel's lobbying won out and the $29 million that was spent to start the process had been exhausted. We need more cities trying to do this to show how it can be done and done well.
It's one thing if a city already has one. But what advantage does the city bring to creating and operating power facilities? That requires many specialists with years of experience, in addition to great leadership. Without that, I assume the government is just a wallet to be taken advantage of.
It's similar to public transportation. Most cities don't design a system, they order it from a catalog - and they pay private consultants (similar to Oracle consultants) to tell them what to do. There is so much corruption and privatization there, but unlike power there is no business case that would make it attractive outside of public funding.
xrd 34 days ago [-]
These formerly "public utilities" are now often owned by PE or Berkshire Hathaway. Whenever I see the folky wisdom of Charlie Munger or Warren Buffer posted on HN, I can't help but think about their firm's work in transforming State Farm insurance, GEICO and this gem I posted earlier today on HN:
"PacifiCorp Was Grossly Negligent in Oregon’s 2020 Wildfires. Now It’s Asking Lawmakers for Protection."
Because of regulation, they can gouge consumers who are captive to the damage, literally and financially.
dragonwriter 34 days ago [-]
None of the things you list are former public utilities of any kind, much less the specific kind under discussion (California public utility districts providing electricity and similar services.) PacifiCorp is a private utility company like PGE, formed from the merger of other (then- troubled), also private, utilities in 1910, and the other things aren't even utilities.
Are there any germane examples of your “These formerly ‘public utilities’ are now often owned by PE or Berkshire Hathaway” claim or is it just a complete non-sequitur?
xrd 34 days ago [-]
I do think you make valid points and I'm wrong about the way I categorized them.
And, I did put public in quotes because these utilities, while privately owned, do benefit from regulatory capture that seems out of place with a privately held company. And they often operate on or over public lands.
And, having lived through the fires in Oregon and seeing the trauma first hand, I'm still angry.
That's my takeaway from the article but I'm willing to listen and learn. Your points are valid and show how mistaken some (or all) of my conclusions are based on false connections.
nonplus 34 days ago [-]
I believe Berkshire bought (or agreed to buy) part of dominion (a public utility delivering power) on the east coast, I don't know any particulars of how it was run or if the deal even closed.
Thats the only related example I know of (non exhaustive).
lotsofpulp 34 days ago [-]
I don’t see anything in State Farm’s history that indicates Berkshire Hathaway had anything to do with the company. It has always been a mutual insurance company, owned by its policyholders.
xrd 34 days ago [-]
You are right. I'm confusing State Farm with Allstate, via McKinsey (I'm reading the book "When McKinsey comes to town"). Berkshire Hathaway owns Geico and has taken a similar path, however. But, this Oregon utility has BH ownership.
1970-01-01 34 days ago [-]
>>they are also undertaking a massive project to underground utility lines in fire-prone areas.
Seems like they're actively trying to fix it.
xrd 34 days ago [-]
I'm glad you stated that. It certainly wasn't my takeaway of the way they handled it, however. By my reading it seems like the local officials begged them to turn off the lines when they saw what was coming. And, that the executives at the utility didn't take action and then denied that this meeting occurred seems damning to the people who lost everything.
flyinghamster 33 days ago [-]
There are a number of northern Illinois cities that have their own utility grids. Off the top of my head I can think of Naperville, Princeton, Rochelle, and Peru, with the last three having their own power plants.
Rochelle's municipal utility system also provides water and sewer, and fiber-optic internet. https://www.rmu.net/
thelastgallon 33 days ago [-]
Austin Energy pays the city 115 million every year.
Austin Energy earns no profits and pays no federal income taxes. All revenues benefit the customers of Austin Energy and the residents of the City of Austin. The primary financial benefit to the City of Austin is Austin Energy’s transfer to the General Fund, which is set by policy and allocated by elected City Council members to municipal purposes such as fire and parks.
The only city utility I've experienced better than Austin Energy is Chattanooga's Electric Power Board (which offers up to 20gb/s fiber to every single electricity customer in their jurisdiction, except some apartment complexes).
Inexpensive, reliable, and heavily litigated (just how I like my local utility).
shawndrost 33 days ago [-]
+1 to this analysis. Urban ratepayers in CA subsidize rural and fire-prone ratepayers. (Utility rates are a stealth tax. Same story as home insurance.) The fight is ultimately political and not as one-sided as you might think. The broad regulator and politician view is that the subsidies are valid, and if the cities all leave the grid, the subsidies will wind up on the state's balance sheet. Nobody wants to see rural de-electrification. Utilities have a lot of sway with politicians for corrupt and non-corrupt reasons.
hahamrfunnyguy 33 days ago [-]
We have a publicly owned electricity utility. Electricity is cheap and it's and it's a selling point for homes within their service area. The other utility is bad, especially when it comes to billing.
People hate it and there has been a big effort from activists to turn it over to public hands. The local politicians are on board for the most part, but the company is of course fighting tooth and nail.
payne92 33 days ago [-]
> It costs a lot of money to deliver power to rural customers
Utilities (generally) have a universal service obligation.
If someone can cherry-pick just the denser areas with lower distribution costs, of course they could "undercut" the utility with the requirement to serve everyone.
(I'm not saying that PG&E couldn't be better managed. I'm saying that there's a much, much deeper policy issue at stake here.)
aqueueaqueue 33 days ago [-]
They made the point that this is the plan. Encourage people to live in cities.
UncleEntity 33 days ago [-]
The more people that leave the rural areas for the cities makes it less profitable to serve the existing rural folks.
I grew up in the Bay Area, lived in 'rural' Humboldt and Placer counties, and can say I would never move back to the bay no matter how much the technocrats would desire it.
Pretty happy with my ~30k town nowhere near California TBH...
novok 33 days ago [-]
And you should be charged the actual cost of maintaining the costs of that small town too.
tired-turtle 33 days ago [-]
That’s fine that you want to stay put, but GP is suggesting (I think) that others shouldn’t have to subsidize your choice to live in a rural area where power service is (currently) more expensive.
llamaimperative 33 days ago [-]
Land Value Tax solves this
aqueueaqueue 33 days ago [-]
How so?
llamaimperative 33 days ago [-]
It incentivizes greater development of already-developed land (meaning less infrastructure serving more people) rather than acquisition and low-yield development of new (more rural) land.
33 days ago [-]
Zaheer 33 days ago [-]
Santa Clara's utility rates are also cheaper because there's a bunch of data centers that are the bulk of consumption and subsidize rates for residents. That said, I'm all for getting rid of PG&E
r0m4n0 33 days ago [-]
Not only am I getting a 14c rate with smud but smud is ask really active in the community. They donate $1000s to my neighborhood association and local maker space. Also a friend is mine wanted 3 phase power ad was researching what it would take.
Smud was very helpful and had a simple process while PGE wanted proof of business usage amongst other stuff (heard this all second hand though)
rangestransform 34 days ago [-]
Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free?
kevinburke 34 days ago [-]
PG&E already went bankrupt recently, and taking over the whole state wouldn't really help very much. The problem is largely liability rules that make it very expensive to provide power to wildfire zones and rural areas. PG&E and the state have decided to pay for that by charging people who live in cities very high rates for electricity.
It's perverse that people who live in safe, urban areas are subsidizing people who live in wildfire zones. The savings come largely from not doing that anymore.
amluto 34 days ago [-]
This whole model is nonsensical, though. Averaging costs among customers doesn’t give anyone the right incentives:
- Urban customers should have an incentive to use electricity over gas, which they would if rates were reasonable.
- Urban customers should not pay per kWh even if one thinks they should subsidize rural customers. It should be some kind of tax with reasonable allocation.
- Undercharging rural customers for provision of service and overcharging per kWh messes up incentives, too. If suburban or rural communities faced the actual cost of transmission to their area and distribution within it, they could make real decisions, for example:
# Technologies exist to reduce the risk that a power line fault starts a fire. Search for “ground fault neutralizer” or “REFCL.” Similarly common reclosers take a very YOLO approach to deal with a faulted line, and other approaches exist. PG&E, of course, doesn’t want to use these because the ridiculous CPUC rules let them make more profit by spending more money trimming trees.
# Communities could maintain their own lines and have actual locally enforced codes about vegetation.
# Communities could install batteries at their end of transmission lines to help ride through public safety power shutdowns and to level out their own loads. And they could even build small wind turbines optimized for operation in high winds (which are rather strongly correlated with those shutdowns) to generate a few MW and keep those batteries charged. Heck, this could be automated: de-energize the line when the wind is high automatically, and there won’t even be a substantial inrush when re-energizing when the wind stops because the batteries can reduce load to zero.
# A community could decide the cost isn’t worth it and build its own mini grid. This might spur interesting investment into things like small modular reactors :)
- The ownership and regulatory structure right now sucks, amplifying all the problems above and the lack of real solutions.
CobaltFire 34 days ago [-]
I bang this drum all the time, but you are the first other person I've seen state it online.
If we stop subsidizing the foothills by creating urban utility districts it would solve the PG&E problem.
We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program.
Long term I think this is the only sane way forward though.
abeppu 34 days ago [-]
> We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program.
But people in those areas are likely to be able to benefit from solar, so maybe being "off the grid" in the sense of not having long runs of power lines surrounded by trees to your house in the country is reasonable, and perhaps also cheaper for those rural residents anyway?
marssaxman 34 days ago [-]
> a ton of people to be unable to continue living in those areas
That sounds like more of a solution than a problem: those places are going to burn, so it's better that people stop living there.
UncleEntity 33 days ago [-]
Ironically, if they just let them naturally burn in the first place there wouldn't be even a fraction of damage caused by these modern wildfires.
Qwertious 33 days ago [-]
IIRC it's a funding problem - controlled burns require a ton of manpower to control, and the longer since the last burn, the harder it is to control.
thatguy0900 34 days ago [-]
Long term I don't see how it's possible to continue to let people live in areas so fire prone that insurance cannot be done, it seems to me. Unless you want to live in a concrete castle or something
mindslight 34 days ago [-]
Construction itself isn't that expensive. It's certainly possible to self insure and accept that living in an area prone to fires means your house might burn down. It goes against the prevailing culture of the ever-growing housing bubble, but financialization has to hit its limits some time.
mauvehaus 33 days ago [-]
Self-insuring is probably not going to fly with your mortgage lender. If nobody can get a mortgage, and everyone has to self-insure, it's going to 1) drive down housing prices (fewer cash buyers) and 2) guarantee that only people of pretty substantial means can afford to live there (even with lower prices, most people can't come up with a cash payment for a house).
mindslight 33 days ago [-]
I did acknowledge it would go against housing bubble culture. It certainly wouldn't be a financially prudent way of obtaining primary shelter, but rather for vacation homes or whatnot. We're mostly talking about rural properties in the woods, right?
coryrc 33 days ago [-]
If prices were sane, anybody who bought a house ten years ago currently has enough equity to pay cash.
33 days ago [-]
trinsic2 34 days ago [-]
You mean like a brick building? like how structures were originally built? Seems like a good idea to me for house to be made of stone in high fire related areas. Obviously the cost would be astronomical.
arrosenberg 33 days ago [-]
Brick buildings don't do well with earthquakes. California also happens to sit on a major, active fault line. While it is technically possible to make a brick or stone building earthquake-proof, I would imagine it's cost prohibitive for large scale single-family housing projects. Apartment towers are already built with a multistory steel-reinforced concrete base that is built to withstand earthquakes, but it would increase costs significantly to build to the top like that.
ahmeneeroe-v2 34 days ago [-]
I am 90% in agreement with you. I do think that you should consider how rural/suburban areas have all of the generation and transmission which the cities rely on for their power.
It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist.
avidiax 34 days ago [-]
> It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist.
There's a difference between people that are in farming/ranching and industry vs. people that are rural to afford a more lavish home in the woods or on the hills.
Even still, a system that doesn't appropriately price and apportion risk will always be under pressure.
ahmeneeroe-v2 34 days ago [-]
>a system that doesn't appropriately price and apportion risk will always be under pressure
Very well stated, I am stealing this. Also in agreement with rural resource types vs rich rural.
Again I think it is more complex than just apportioning power costs. CA effectively has a state policy of not maintaining its forest/rural land (ditto feds and their land). My parents live adjacent to national forest and have fire evacuations nearly every year.
There is nothing that the rural residents in their area can do to mitigate risk, even at their own cost. So we're asking them to bear the cost of the state/fed policy decisions. This is exactly the problem you describe of inappropriate price/risk apportionment.
coryrc 33 days ago [-]
The forests are supposed to burn.
They mitigate by building fireproof homes and leaving when the fire comes. Or just not living there.
ahmeneeroe-v2 31 days ago [-]
Yes, small frequent burns which are allowed to consume the dry biomass. This does not describe the current fire management process in the western US
janalsncm 34 days ago [-]
> they provide the means for the urban areas to exist
Unless you’re referring to farmers I don’t understand this point. As of right now it is the other way around.
ahmeneeroe-v2 34 days ago [-]
No. Build the generation for urban areas within those same urban areas.
rangestransform 34 days ago [-]
How about:
- we get rid of nimby enabling laws
- don’t subsidize rural customers
- automate farming
refurb 33 days ago [-]
Absolutely, barring the company bringing them to court for violating the "taking withouy compensation".
But what people forget is that the CA state doesn't want PG&E.
The state already exerts significant control over PG&E operations through the CPUC (members nominated by Gavin Newsom). CPUC approves/rejects all capital spending down to new fences for electrical substations. You can read about all the decisions in the 931 page rate decision, which is public.
So at this point the CA state government basically runs PG&E. But if they purchased it, they'd be exposing themselves to all the political risk when things go bad.
But right now, they get political air cover. Despite the tight level of control over how PG&E is run, the CA state government gets none of the blowback.
It's the optimal setup from a political perspective.
rufus_foreman 34 days ago [-]
>> Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free
I don't think so. Not currently.
"nor shall private property be taken for public use, without just compensation"
That's federal law. Supposedly, that applies to the states through the Fourteenth Amendment. All of the sudden, once the Fourteenth Amendment is passed, the Constitution applies to state governments, not just the federal government.
So if that's the case, no. You can't just "scoop up the assets for free" because you can't take private property for public use without compensation. I'm kinda a little bit suspicious that it makes sense to interpret the Fourteenth Amendment that way. Sounds like a power grab. If you want to try and turn that around, I know just the guys to do it.
rangestransform 33 days ago [-]
It’s not unconstitutional to make utilities liable for fires that their power lines ignite, and it won’t be a taking without just compensation if the actual value of the company drops below zero
rufus_foreman 33 days ago [-]
>> It’s not unconstitutional to make utilities liable for fires that their power lines ignite
That's not the question under consideration.
The question under consideration is if it constitutional for the government to "impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free".
Under my understanding of the law, no you can't do that, due to the takings clause and it's incorporation under the 14th amendment.
I think the law should be different, I don't agree with incorporation doctrine. But I still don't think the government should impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free.
Hopefully that clears everything up for you.
bobthepanda 33 days ago [-]
This is generally a horrible idea.
This is how public transit companies were generally acquired, but on the way to bankruptcy firms would defer maintenance to stave it off, which led to the sorry state of most mass transit systems today.
bloomingkales 33 days ago [-]
If Star Citizen can get nearly a billion dollars, I think we can all (right here on HN) evangelize a kickstarter for this. We just need the people that know this in and out to lead.
We should be doing more really in our current world. I confess I too spend too much time trying to build little apps just for money.
This just for money thing has got me reflecting a lot lately.
yonran 33 days ago [-]
It seems that the bulk of the savings for making an urban municipal utility come from not having to pay for upgrades in fire-prone regions. And the end game is that cities will have their own utilities with lower rates, whereas rural people will be adverse selected to be stuck with PG&E and pay thousands of dollars per month on energy. Wouldn’t it be easier for PG&E themselves to implement this desired rate schedule where urban rates are cheap and rural rates are expensive? It seems odd that the PUC would not allow PG&E to charge extraordinary rates for rural areas today, but they do allow cities to buy up the good parts of PG&E which will inevitably lead to the same outcome in the future.
teknopaul 33 days ago [-]
Profit creaming, not good for county even if it seems good in the city.
Everytime there is a natural disaster in the US the press report xxxx houses without power.
US leccy firms pride the bear minimum service, always. Profit comes first. Delivery second priority at best.
This doesn't ofter happen in Europe because they dont profit cream and builds reliable redundant grid for almost everone.
The grid even extends beyond countries boundaries, with neighbouring countries supporting each other.
Some folk out in the sticks, who you might think don't matter, provide useful services to the city folk. Eg farmers.
I.e. Cost the grid not the city.
You probably are being ripped off in the US, but that's a different story to the one being told imho.
Careful what you wish for.
gottorf 33 days ago [-]
The average American utility company nets around 10% return on equity, IIRC. 30-year Treasury bonds can be had today around 4.6%, with none of the risk or headaches of operating a business. Hardly a bastion of profitability.
I agree residential electric infrastructure in the US is not nearly as good as it could be. Buried power lines in suburban environments alone could probably cut outage numbers at least by half; but as one of the first countries in the world to electrify, doing that is a lot more expensive than in developing countries. Sometimes there is such a thing as a first-mover disadvantage!
bunabhucan 33 days ago [-]
There was a thread recently on a subreddit talking about hn threads that get outside the hn circle of competence (nuclear weapons in that case) and this thread is giving me the same vibe. I work in utilities and have worked in multiple countries/continents and all over the US (and lived and worked in CA) for munis, coops, national carriers, giant IOUs etc.
If you see something you disagree with here please treat it as "I implemented notepad.exe in elisp" level of not even wrong.
kevinburke 33 days ago [-]
Thank you, I got the same impression, I have relatives and friends who work in government roles for local and statewide energy operators and ran this post by them, hopefully I did not butcher the details too much.
calvinmorrison 33 days ago [-]
Philadelphia has repeatedly killed people due to aging infrastructure. They have wooden pipes 100 years old. Half my block caved in due to a sewer collapse. They estimate all the current backlog of pipes will be done in 100 years.
Yes you can start it, but should we bow to political pressure to put off maintaining infrastructure? No. There's a real cost to maintain this stuff. But a political force doesn't want to raise prices so it gets depayed.
kevinburke 33 days ago [-]
This has not been the case with the three operators in the Bay Area - Santa Clara, Palo Alto, and Alameda.
*cost-effectively — confusing title without the proper adverb hyphenation
blackeyeblitzar 33 days ago [-]
I can believe this is possible from a cost perspective, but I cannot believe that local governments can have leadership quality that is sufficient to do this well most of the time.
fsckboy 33 days ago [-]
in situations where you want or need to look into "uninterruptible power backup" at even a reasonably small scale (e.g. a large apartment building or a hospital), given the cost and durability of a diesel generator, once you've bought and installed one, turns out you might as well run it. Varying economic and regulatory conditions can make it more or less viable, but it's in the range of feasible.
lokar 33 days ago [-]
PG&E should have been liquidated in bankruptcy and the physical assets taken by the state, with regional public utilities created from them.
kevinburke 33 days ago [-]
Bankruptcy would not help because you’d still have some entity managing the entire coverage area. The gain comes from creating a market for lemons.
lokar 30 days ago [-]
No, give each county (or neighboring group of them) the opportunity to form a local utility and take over the mgmt. local municipal utilities have a really good track record.
rightbyte 33 days ago [-]
Social democracy in fashion again?
mmooss 33 days ago [-]
It's interesting that in some HN discussions, all the arguments for (in this case) public ownership are valid and the advantages of private ownership seem to be completely forgotten. And in other discussions, it is vice-versa.
I think that reflects the broader public. If you can get people in one or the other mode, they will forget what they knew 24 hours ago.
Personally, I think private ownership and public ownership are two tools in the toolchest, good for different tasks. In many cases, privatization is a capitalist who notices a large, reliable cash flow, such as public utility revenue, and wants a cut of it. Public ownership can suffer from a lack of innovation - perhaps that matters less for mature technologies.
owenthejumper 33 days ago [-]
East coast is struggling the same. Not as crazy yet but Coned in NY is now over 31c
throwaway984393 33 days ago [-]
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ChicagoDave 33 days ago [-]
Geneva/IL has its own utilities. Water and electricity. Gas is still ComEd.
legitster 33 days ago [-]
I'm as capitalist as they come, but I think privatizing natural monopolies makes no sense.
In our area, they handed over all school bus services to a private firm. The number of drivers, buses, and routes do not change. How was it supposed to save costs without degrading the service? The answer is, it did not. But administrations were diluted that they could take it off their liabilities.
a3w 32 days ago [-]
What is PG&E should perhaps be on top of the page?
33 days ago [-]
gunian 33 days ago [-]
i miss feudalism the olden times of fiefdoms were so much better than one world humans
imchillyb 33 days ago [-]
Electric, Water, Sewer are modern necessities.
Our governments should provide these services to Citizens at no cost to them.
We already pay for the maintenance costs and infrastructure is already built out.
Charge the companies for the services, and give them to the populace.
But, but, but, that's socialism! Taxes are socialism. Take from the many, use that spending power to benefit the people.
rsynnott 33 days ago [-]
Sure, providing power to a city is cheaper per-head than providing it to a large area which includes a lot of rural customers, news at 11. But they probably should not be _allowed_ to do so, because it would make providing power in rural areas at all uneconomic. If you had an electricity market where everyone paid actual cost to deliver power to them, you’re really talking about just having cities.
indus 33 days ago [-]
and cities can build roads and highways too?
jmyeet 33 days ago [-]
It never ceases to amaze me how often people will make socialist economic arguments (that are objectively correct) yet eschew the label "socialism".
An enterprise, like providing a utility, has revenues and it has costs. The difference between the two can be called the "surplus labor value". What happens to that depends on the economic system.
In capitalism, capital owners own that enterprise (utility) and they siphon off profits raising the costs. Put another way, capital owners own the means of production, not the residents of the city or the city itself. This is rent-seeking behavior.
In a socialist organization of the economy, the residents either directly or through the city itself, would own the utility. Any profits would go back into the utility or be extra revenue for the city but there's really no incentive to increase prices on the citizens who own the utility (unlike the unquenchable thirst for increasing profits for capital owners).
I have to constantly point out that capitalism isn't markets (market existed thousands of years before it and exist in every economic system). Capitalism simply supplanted feudalism by replacing kings with billionaires. That's it.
We have abundant examples of how the latter is a substantially better system. Just compare EPB Internet (Chattanooga, TN and surrounds) vs Verizon, AT&T, Comcast or Spectrum. Municipal broadband, without exception, is substantially better than any national ISP. The only thing that keeps national ISPs in business is more rent-seeking behavior such as lobbying for legislation to ban municipal broadband.
Given this is the Superbowl weekend, it's worth adding that the Packers are owned by Green Bay (an arrangement the NFL now bans for any other franchise). What do we see in other cities? Teams extorating massive tax breaks from cities, counties and states to build massive stadiums at taxpayer expense without the team having to give up anything. The KC Chiefs are rumbling about leaving because the city didn't pass a sales tax increase to pay for upgrades to Arrowhead Stadium.
I don't know why anyone is surprised by any of this anymore.
mmooss 33 days ago [-]
Do you think public ownership would have yielded the development of modern IT, for example?
Minitel is just one project, a successful one but eclipsed by the rest of the IT world. Does that mean the French government could have done what SV did? Why didn't they?
throwaway4220 19 days ago [-]
I was about to argue against you, but here is some nuance from a bbc article about minitel:
It was the whole model that was doomed. Basically to set up a service on Minitel, you had to ask permission from France Telecom. You had to go to the old guys who ran the system, and who knew absolutely nothing about innovation.
"It meant that nothing new could ever happen. Basically, Minitel innovated from 1978 to 1982, and then it stopped," he says.
But others are less critical.
Valerie Schafer, Thierry's co-author, says "the way Minitel is now fobbed off as risible and old-fashioned" is unfair.
"People forget that many of the ideas that helped form the internet were first of all tried out on Minitel. Think of the payment system, not so different from the Apple app-store.
"Think of the forums, the user-generated content. Many of today's web entrepreneurs and thinkers cut their teeth on Minitel," she says.
"The world did not begin with the internet."
jmyeet 33 days ago [-]
The Internet was quite literally a government invention. Google was invented at Stanford. Linux was created by a volunteer who organized on Usenet.
mmooss 33 days ago [-]
Sure, but most of the innovation was in private companies and in open source projects (which I should have included in the first place).
> Usenet
That is FOSS and P2P collaberative (at least on the server level). Is that somehow connected with government?
jcarrano 33 days ago [-]
If PG&E could be undercut by 25%, then why are there no private companies doing it? Either it is not as profitable as the author claims, or PG&E's monopoly is due to state regulations (I don't know enough about the specifics) and it would be quite contradictory to demand the state solve the problems it created.
Overall it reads like any other socialist argument for nationalizing (in this case "municipalizing") companies, which does not work both on theoretical grounds and based on historical experience. The claim "Walnut Creek could borrow from its utility in recessions, and loan money during booms" is laughable. We know how that ends: the city would finance its deficits with utility money until the company is bankrupt.
aquaticsunset 33 days ago [-]
Municipal utilities exist everywhere. I'm not sure why you're being all hypothetical about it. They work well and for many reasons discussed here, sound like a good fit for Walnut Creek.
tamaharbor 32 days ago [-]
Good luck getting that 4% financing.
tristanb 34 days ago [-]
I am so sick of PG&E - our energy bills are nearly $1,000/mo. It's absolutely bonkers.
ahmeneeroe-v2 34 days ago [-]
Look at your power bill. Half of your kWh cost is taxes to the State of California.
You could literally have half the power bill tomorrow if CA would stop taxing it.
hypothesis 34 days ago [-]
No can do, they are going to start taxing (hard to call that billing at that point) you based on your income. At least that was the plan last summer or so.
kevinburke 34 days ago [-]
All utilities have usage based costs and large fixed costs. Historically, all utilities have charged solely on usage. The problem is when you have solar, or solar + battery, your usage goes way down. Unfortunately the grid still needs to be maintained and power plants at peak times (maybe a bit lower, but still high) still need to be paid for.
With usage based bills, people with solar pay less than their fair share for the maintenance component of a utility's cost, which means that this cost is larger for the other rate payers. On top of this California has huge subsidies to early rooftop solar adopters. This structure hurts lower income people more since lower income people are more likely to rent and apartments don't have as much space for / not as interested in rooftop solar.
So the CPUC started exploring different models for adding a bigger fixed charge to the bill and lowering the per-kwh cost. Of course the rooftop solar installers hated this as did the different "equity groups." Which is where you got the idea to adjust the fixed charge based on income.
I don't think it's a great idea but I at least understand where the CPUC is coming from. We probably need more innovation in utility pricing models.
hypothesis 34 days ago [-]
I appreciate you writing a detailed response, btw.
The issue I have with this idea is that it basically punishes initiative or people who invested in energy efficient products. What’s the point if you can just wait and juice the other guy? Is the climate change a deadly serious issue or not?
Similarly, the part about taxation is self-inflicted wound, where they could have came up with a subsidy, that would have much less complains.
33 days ago [-]
peterbecich 34 days ago [-]
Yes, that plan was ridiculous. A highly paid worker living efficiently in a small condominium would be heavily penalized. Meanwhile someone living in a McMansion with a lower salary would effectively have a lower bill per kWh.
It is best as it is today: a consumption tax, like the gasoline tax. What justification is there for charging a higher income bracket more for electricity? You could make the "infrastructure maintenance burden" argument about anything: food, movie tickets, etc.
jerlam 34 days ago [-]
The income thing was a bit overstated; PG&E will offer discounted fees to people already on existing income-based discount programs.
As the blog also mentioned, Santa Clara city charges 17c while in the neighboring San Jose I pay average 50c (time of use plan).
Half of 50c even if I believe you is 25c still higher than 17c.
ahmeneeroe-v2 34 days ago [-]
Don't believe me, just research your bill.
aidenn0 34 days ago [-]
I paid an average of $0.31 per kWh last month with SCE (which is on the low side, because a lot of that is charging my car, which I have setup to only charge during off-peak). I see under $0.06 per kWh of Non Bypassable Charges. The word "tax" does not appear on the bill, except in a notice about raising rates which mentions a loss (with the word "after-tax" appended to the amount of the loss) incurred by SCE.
yumraj 34 days ago [-]
I’m saying San Jose PGE is more than half what Santa Clara pays.
So even if half is tax, it’s still a lot more. And, half of Santa Clara’s would also be tax.
locallost 33 days ago [-]
This can't be true. Every month?? How many kwh per month do you use, and on what?
simoncion 33 days ago [-]
I pay $200 per month in electricity costs. I live in a small San Francisco apartment. I have two laptops, two desktop machines (only one of which has a video card in it), two monitors, some ethernet switches and WiFi APs, a fridge, a microwave oven, and two ceiling fans.
My heat (for both air and water) is provided by the building's boiler and is included in the rent, rather than the utility bill. My stove and oven burn natural gas. My air conditioning is "open the windows and hope it's not 95F outside".
I could totally see someone who had to do electric heating and cooling having a far larger bill than I do (especially if they're living in a place that's large than a shoebox).
locallost 33 days ago [-]
I can't see it, even with heating, as it's California. Even at something outrageous like $1 per kwh it's ~1000 kwh per month (I suppose PG&E takes some fixed costs like everyone else in the world). For comparison we're a family of four and just got our final bill for 2024, we were at 1500kwh for the whole year (more or less the same for years now).
Even yours is weird. I don't have a desktop computer running but we cook or bake with electricity every other day. I do realize we spend a lot less than other people, every time I check the prices and estimates if I want to switch the companies estimate 2500kwh for two people. So there's that.
simoncion 33 days ago [-]
> [My family of four] were at 1500kwh for the whole year...
Weird. Looking at my past several bills, my monthly usage is fairly constant; ~450kWh per month. So, (if my math is correct) that puts my annual usage at ~5400kWh.
> I can't see it, even with heating, as it's California.
I've no idea where OP is, but there are inland parts of the state that get dangerously hot in the summer. Cooling could be a big concern. Plus, rental housing in the state is often poorly maintained, so all that lovely conditioned air could very well be leaking out all over the damn place.
rsynnott 33 days ago [-]
> Weird. Looking at my past several bills, my monthly usage is fairly constant; ~450kWh per month. So, (if my math is correct) that puts my annual usage at ~5400kWh.
That’s really quite a lot if you don’t have electric heating and cooling. It’d be worth trying to figure out where it’s going.
simoncion 31 days ago [-]
This is probably a long shot, but do you have any recommendations for power draw monitors that plug into a US outlet and report power draw either over plain old serial port, or USB?
Every couple of years I look around a bit for something suitable, but have been unable to find anything that fits the bill, looks like it's not totally garbage, and isn't priced in the neighborhood of lab-grade measurement equipment.
aqueueaqueue 33 days ago [-]
Sounds like an inefficient house and lots of heating or cooling.
Or some kind of production / workshop / datacentre / business usage.
atlas_hugged 34 days ago [-]
Same thing is likely true in SoCal. The city of Azusa,CA has their own, non-Edison utility, and their rates are 1/3rd of the Edison rates in the towns around them.
mmooss 33 days ago [-]
Could Azusa sell power to the town around them?
throwaway984393 33 days ago [-]
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temptemptemp111 33 days ago [-]
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35 days ago [-]
gojomo 33 days ago [-]
PG&E's absurdly high rates are how they finance the careers of Governor Newsom & his wife, and "donations" to a giant array of other pet project "charities" for politicians & their favored cronies/causes.
Why would any of California's uniparty establishment want to refund all that money to random utility customers – who might not even be reliable party footsoldiers?
PG&E's lowest overnight rates are 30¢/kwh, surging during peak hours to rates ranging from 39¢/kwh to 72¢/kwh.
In neighboring Nevada, the utility serving its major metros NV Energy has rates of 11¢/kwh for residential users & 7-9¢/kwh for small businesses.
Aurornis 33 days ago [-]
> But over the past two decades, Newsom (D) and his wife have accepted more than $700,000 from the Pacific Gas & Electric
$700,000 over 20 years is $35,000 per year (not to mention Newsom wasn’t governor for most of that time)
PG&E revenues are $25,000,000,000 per year.
Regardless of what you think about the arrangement, it’s not why rates are high.
> In neighboring Nevada, the utility serving its major metros NV Energy has rates of 11¢/kwh for residential users & 7-9¢/kwh for small businesses
Comparing electricity costs across difference states rarely indicates much. Geographies, energy sources, and regulations are very different from state to state.
gojomo 33 days ago [-]
Of course it's not the 1:1 expense passthrough of PG&E's multidecade sponsorship of just Newsom's family that alone causes higher rates.
It's the tens of millions in political contributions to not just Newsom at every stage if his career but also his allies & ilk.
Plus tens of millions more in donations to favored "charitable" projects of family & cronies of politicians like Newsom & his allies.
Plus harder-to-tally overpriced jobs & contracts steered to the "right" (regime-aligned) consultants, firms, & unions. (Did you notice how the glowing character reference in the Wapo article, about how immune to influence Newsom is, comes from a former Newsom advisor – & member of his wife's nonprofit board – who currently has PG&E as a paying client of his PR firm?)
All the cash & favors are then topped off with a showy cheerfulness to "accept the responsibility" of extra costs from those state-idiosyncratic "regulations" you mention.
But of course that's the quid pro quo of their monopoly remaining unchallenged, & all costs more-than-passed-on to ratepayers – so the ruling machine including Newsom can keep getting their beaks wet in all PG&E's spending & donation fountains.
To look at only the formal campaign contributions against revenues, & accept as excuse a cover-story for extra corrupt expenditures ("regulations are very different"), & then conclude "no problem" is exactly why milking ratepayers this way, spreading the loot widely, is such a enduringly great racket.
culopatin 33 days ago [-]
I don’t think they imply the payouts are so big they need to raise the rate, but that they have the support of the people in political power to maintain the monopoly and keep charging whatever they want.
After I moved a city council for whatever reason ended up selling. As a result the cost of electricity immediately doubled and power outages occurred regularly due to reduced maintenance. I don't know what they spent the money on that they received but it was a very poor decision that I have to believe they regret.
As an outside observer, the fact that PG&E can lie to the state and request money for maintenance, subsequently sending that money to shareholders, looks like a likely candidate for many of the problems.
It's especially annoying that it's the lowest quality power while it's working (compared to a pure sine signal), has the highest count of days with some power blip, the highest number of full days without power each year, it's 2.5x more expensive than anywhere else I've lived, and they don't even have snow or ice or the same levels of wind and rain as the other places with better power. Plus they're servicing more people per square mile. It ought to be more efficient.
Maybe CA really is special somehow, but it looks like ordinary corruption.
Power bills increased after switching to community generated power.
I’d guess the problem is more endemic to their political system.
Berlin for example had a massive bank collapse in 2001 under the Conservative government that ended up placing the state of Berlin into billions of euros worth of debt and financial risk. The succeeding SD/Left/Green triplet coalitions had to fire-sell off many state-held assets like the water utility (that ended up a disaster on its own [2]) and especially a huge amount of residential real estate, which is now contributing to the insane rent explosions in Berlin.
To this day, Berlin hasn't recovered from all the penny-pinching of the last decades.
[1] https://de.wikipedia.org/wiki/Berliner_Bankenskandal
[2] https://de.wikipedia.org/wiki/Berliner_Wasserbetriebe#Streit...
We have not had anything on the scale of what the GP describes of a city going billions into debt - even Birmingham is orders of magnitude less bad.
The government sold assets, but not at fire sale prices. I do not think selling utilities was a great idea, but its not as bad as either what GP describes, nor the "small town in Michigan" example at the top of this thread (when did you last experience a blackout in the UK?).
They organized and succeeded.
Where was the opposition? Is the entire German environmental movement beholden to the Green Party?
And even it they don't seem to have memory now of doing so, I applaud them for this specific decision back then.
Our modern political economy is almost entirely focused on ensuring that everything that can be sold to private entities (read, the market) is. In this ideology the sale would be viewed as a success regardless of any practical downsides.
In other places on earth, selling public utility requires the company to operate at similar or better level of services previously provided while retaining the cost. And those deals are mostly regulated, penalties when not meeting them.
And it used to be, may be in rare cases the people in Government making those deals actually knows what they are getting out of it, so the contract are all well written.
Now it seems they are selling because 1. They dont have money. 2. They are running it poorly. 3. They are bribed or have incentives to sell it. All with no caring of how the people they serve were getting any good value out of it.
Our railroads paid a nice 300m in divident every year then corona came, people were told to stay home. You can guess who had to pay for the lack of travelers.
The most silly are ISP's. The prices in each country depend on how much people can pay and what you get for it is rng
The one privatisation I believe the UK got right was British Telecom.
We now have a strongly regulated infrastructure side called OpenReach - the price they can charge for last mile connectivity is limited, and as such we have a load of different ISP's which either compete on tech and service (AAISP, Zen) or cost (PlusNet et al).
And then a proliferation of alternative last mile providers has also occurred - I now have the option of 900/100 FTTP from OpenReach based suppliers, 1130/104 DOCSIS from Virgin Media and 900/900 FTTP from CityFibre based suppliers.
I'm paying £40 a month for the latter.
Hopefully there will be enough push to get 1Gbps Connection to every home rather than settled on 30Mbps.
[1] EXCLUSIVE: January 2025 update on broadband availability across the UK, nations and regions
https://www.thinkbroadband.com/news/10528-exclusive-january-...
You can straightforwardly privatize things that can't be allowed to fail. Power generation is a decent example: If you have a hundred independent generating companies that all sell into a live auction market, they have to compete with each other which keeps prices down and the market as a whole remains reliable because there are many independent suppliers using different generation methods and if any one of them experiences a failure you can immediately switch to the others. The market has the incentive to be able to supply even during grid stress because the price will go up then, so suppliers with reserve capacity make back their costs for keeping it in reserve.
The problem comes when there is corruption. Instead of having a competitive market, the contract is assigned to cronies, or a lack of antitrust enforcement allows the market to consolidate until the suppliers are a cartel. Then, since competition is thing that gives privatization its advantage, the lack of competition causes the public to get screwed.
"Operating" the grid isn't the natural monopoly either. The natural monopoly is actually the physical space beneath the grid, i.e. the roads. If a storm knocks down a pole or some transmission lines need to be upgraded you could put out bids to any number of companies to come and do the work. If customers want to buy power from a generator, the grid is used to deliver it, but that doesn't mean the grid operator has to be an intermediary between the supplier and the customer instead of a vendor of the supplier paid to deliver power. It's not even obvious that they should be paying per kWh instead of funding distribution through taxes in the same way as the roads, since a well-functioning grid should never exceed peak capacity but using otherwise-idle transmission capacity has no variable cost.
And then what's the natural monopoly? Just physical ownership of the infrastructure, and some accountants to predict when demand is about to outstrip supply and bids should be put out to expand capacity.
I didn't get to bid in an auction. Providers bid until they had enough then the price was fixed based on the most expensive source.
We also designated a windy chunk of government land next to my city to private wind energy. Besides land it needed a bit of subsidee to spin them up.
Big turbines happened that provide enough power to run the city.
Not that the city didn't have the money to do it themselves. Its dwellers could also easily afford it. That's just not how things work around here.
Mysterious actors blew up some pipeline some place in the north and the highest bit went up dramatically.
It didn't fail, people just couldn't pay their bills anymore.
The market was very good at increasing profit when demand was larger than supply.
One could imagine worse circumstances with a larger effect.
That's what it's supposed to do. Then in the absence of regulatory barriers to entry, new suppliers enter the market to capture those profits, until the profits aren't so big anymore because there are more suppliers.
One of the things that messes people up here is that they want consistency but don't want to pay for it. You have a competitive market which is providing low prices until there is a supply disruption. Then prices are temporarily high. If you wanted to you could have bought insurance or futures etc. so that you would always pay a consistent price, but then you'd be paying a higher price than the market on the days when supply is good so that you could pay a lower price when supply is low. People then complain about that too, but those are your options; if you pick the "don't buy insurance" one then you're exposed to events, but you should be the one who gets to choose.
And maybe if you're poor you don't want the insurance, what you want is to have the lower price most of the time and cut back your usage when the price is high. But either way, that should be something you get to decide instead of something somebody decides for you.
My gut says it is like needing for example a car. You could rent or lease or you could buy one in cash on on credit. Each choice makes sense to someone. If it is to be a collective choice/deal it should be cheaper and I see no reason why it can't offer the same options. We have this weird tendency to shove all collective arrangements in governments boots where we know the outcome will be something stupid, turn into something ridiculous or both.
I really want to see gov processes strictly defined. Then we can have the government set up entirely independent bodies that strictly follow their charter. Ideally it pays no taxes, no one works there, no one owns it. I might even like blockchain for this purpose. We want 1234 new lease contracts for 2026, any company may bid, customers press accept. The one most accepted gets to provide the [proverbial] cars.
It seems doable.
What are some examples of successfully privatized utilities?
And then there's dark pools. Trading isn't even done on the market anymore.
This is such a non-sequitor, it undermines your entire post.
Food: - restaurants definitely compete with each other, mostly in each local area - and within that, different slices of the restaurant business more directly compete, e.g. fast food is more competing with each other than fine dining. - BUT: we have a huge problem with a lack of competition in the supply chain driving prices up for everyone, at least in the US. - Groceries are similarly impacted by supply chain monopolies
Smartphones: high end smartphones are a oligopoly: - Apple vs Samsung vs HTC and several other tech companies producing phones; Apple definitely commands quite a bit of a premium, as do some of the nicer Android phones. But on the whole, the companies really are fighting to one-up each other with better features, battery life, etc. - quality is improving, even if the price is over-charging vs the ideal competitive market. Low end phones are even more fiercely competitive
Other electronic categories seem to show decent market dynamics; headphones, earbuds, usb peripherals, keyboards, etc. all seem very commoditized; there certainly are brands that try to command a bit of a premium based on reputation / marketing, but the cheap options are often good enough and definitely have a very competitive market. Big electronics like GPUs and gaming consoles though I think it's easier to start considering market distortions due to more monopoly power.
Of course there are no shortage of monopolistic practices out there, e.g. for utilities, collusion on rent, online retail (Amazon), textbook prices, medical care & pharmaceuticals, and even more mundane things like frozen potatoes and chicken.
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The thing that bothers me most with the simplistic view that "the market will do it better" is that the whole premise of market forces giving the most efficient price assumes that (a) a commodity is being traded by (b) a large number of buyers and sellers, none of whom have any significant share of the market. Many markets either (a) aren't trading a commodity (e.g. iPhones and Android phones aren't interchangeable so Apple can command a premium price) or (b) have consolidated buying or selling to the point that they don't have the large number of independent buyers or sellers necessary to have the price be set by market dynamics rather than the monopolist or monopsonist. And the people promoting "let the market fix it" either are too dumb to realize that, or more likely are letting their rich friends make a quick buck or want to score political points by promoting smaller government.
What could be interesting is to have the local government found a co-op, i.e. they issue a bond to do the build-out and then hand the network to a co-op in exchange for a contract to pay the debt, essentially giving the co-op the backing of the government's credit rating for the initial build-out. Then the co-op board gets separately elected by its customers so they're directly accountable to the customers for any shenanigans.
All that to say, voters here do care about utilities, and the coop solution worked for about 25 years iirc but it can't work in today's "one solution fits all" regulatory context anymore, at least where i live. Things are far from that simple in practice.
For trains it's much harder - yes, there are two providers on the WCML, but they're not equal (one runs faster trains) and as such there's zero real competition.
So you have the government own the tracks, contract with a private company to maintain them. Then anyone can use the tracks, like anyone can use the roads. Private companies offer train service to the public. All they need is rolling stock and they can start selling tickets. You then get a market that looks like airlines, i.e. entering the market is a moderate investment (millions; buy rolling stock/planes) rather than needing billions to build the network itself. More popular routes get more suppliers, which turns into more frequent service. There is plenty of competition because rolling stock is mobile and can easily be reassigned according to customer demand.
That said, who is to say the trend isn't reversible some day.
Also let's not forget the selling to private operators does provide benefits, not always, it's not the magic fix we pretend it is.
To see some examples of this, look at the arguably social democratic Keynesian US from the fifties, and where they're at now. Similarly for the United Kingdom. Labour used to fight for social democratic policies, and since the advent of "New Labour" (Thatcher's greatest victory), they're essentially a right wing party. For a much more harrowing example, look at Allende in Chile and the US sponsored coup by Pinochet.
In general what you see is that the social democratic status of a state is an unstable one. Roughly speaking, the people who would benefit from neoliberal policies happen to have a lot of money with which they can and do influence politics. There's campaign funds, lobbying, but much more importantly owning the media[1]. Propaganda is incredibly powerful (we are not immune), and it has been used successfully time and again to get people to vote against their own interests, such as abolishing social democratic practices.
[1] In the case of Chile, and for example Indonesia, the mechanism is much more violent, but the principle the same. Capital is spent to successfully influence politics in favor of capital.
The best system is a free market, if possible. But the second best system may not be close to the best system, it may be a local minima that is very different.
A classic example is that small companies and no unions is theoretically best, but monopoly unions vs monopoly companies is the second best (since there's no single monopoly, so they negotiate something close to the theoretical ideal).
Free markets are best, but if the government is going to heavily subsidise and regulate the power companies (as they are natural monoplolies, so they either get regulated or they abuse their position) then maybe it's best to just cut out the middle man.
This premise is highly questionable. Certainly for competitive markets it's entirely false. Uncompetitive markets suffer largely the same failure mode as government bureaucracies, but it's not even clear that this is actually worse, because government bureaucracies are susceptible to not only charging bloated service fees for mediocre service, they can also be captured into diverting tax dollars to private cronies. Just because the government owns the real estate doesn't mean it's manufacturing its own trucks and networking equipment and copy machines, but as soon as it isn't, it's buying that stuff from the market and you need a competitive market or you're still screwed.
So what it comes down to is, you need a competitive market.
Apologists love to complain that <insert problematic market outcome> isn't the product of a true market but that dog doesn't hunt. We have the economic system we have. We call it capitalism. It produces the above mentioned (and countless other) excerable outcomes. No excuses.
Cost disease induced by regulatory capture and a massive housing shortage induced by zoning regulations.
> Once you've cleared that hurdle your next task is justifying the current massively skewed (and worsening) income distribution in the US.
Poverty traps created by social assistance programs that put overlapping benefits phase outs on the lower middle class, causing them to incur oppressively high de facto marginal tax rates that in some cases exceed 100% of marginal income.
> Clear that bar and all that's left is justifying private equity eating everything from fast food franchises to the healthcare system.
This is regulatory capture again. Captured markets consolidate and then corporate raiders notice that the incumbents have a monopoly but aren't screwing their customers quite as hard as a monopolist can do. The underlying cause is government regulations insulating the incumbents from competition; private equity are the maggots that come to eat the corpse once the market is already dead.
Notice how there was "capitalism" in the 1950s but lower levels of corporate raiders or income inequality etc. So then you might wonder what has changed between then and now, and an interesting proxy is the number of pages in the US Code and Code of Federal Regulations.
> We have the economic system we have. We call it capitalism.
If you judge an economic system by what people call it, we called the thing that happened in 20th century Russia "Union of Soviet Socialist Republics" and the thing that happened in WWII Germany "National Socialism" and by this logic we shouldn't attempt anything called "Socialism" ever again.
But if socialism is the thing where you put the government in charge of the economy and capitalism is the thing where you limit the government from interfering with the market then socialism is the thing we've actually tried. How are you going to put e.g. the US healthcare system on "free markets" when it's the most regulated market in the US?
Ish. While regulatory capture is at the heart of most of the truly ass outcomes attributable to capitalism it's comical that an attempt would be made to assert less government oversight would in some way be beneficial. What, are we pretending the last several decades of blissfully ignored potential anti-trust cases, questionable mergers, etc. aren't the direct result of captured legislators being told to just sit on their hands?
Incidentally the "housing crisis" has nothing to do with zoning. Offshoring manufacturing and permitting AG conglomerates to bankrupt the majority of family farmers has resulted in rural communities being stripped of economic opportunities which caused a flood of economic refugees into high cost residential markets. Proof: pundits screech about a lack of affordable housing when ~8 million units sit unoccupied, many outright abandoned. In Other News: when zoning changes are made to permit the kind of multi-story mixed use structures that are hyped as a solution to the housing crisis what happens is they get built, the local market gets an influx of condos that nobody who lives in the area can afford and nearby housing increases in cost (a net reduction in affordable housing), literally the exact opposite of the effects advertised.
> How are you going to put e.g. the US healthcare system on "free markets" when it's the most regulated market in the US?
Most regulated...the what now? Private equity firms and healthcare megaconglomerates (oh I'm looking at you Duke Health) that are sweeping up private practices and hospitals all over the country. Without exception this leads to measurable decline in quality of care, and is the leading cause of rural hospital closure nationwide. This phenomenon is also driving up the cost of performing clinical trials as these outfits are savvy enough to intentionally target practices that perform trials. The resulting increase in fees to run a clinical trial are so steep they trigger fraud warnings in industry benchmarking software. Anyway, given we're the only industrialized nation who's healthcare system isn't entirely controlled by the government this claim seems pretty rich. One of several ironies here being freeish marketish healthcare produces some of the worst healthcare outcomes of any industrialized nation, at four times the cost. Wheee.
Put another way yeah the government is culpable only in the sense they decided to not actually govern, thus letting The Market run rampant.
Regulatory capture isn't just industry capturing the government so they can avoid regulations. They capture the government so they can control the regulations, and then use them to exclude competitors by increasing regulatory barriers to entry.
It's pretty hard to sustain a monopoly in a market with low barriers to entry because the entry cost is lower than the prevailing prices, and new entrants don't sell to the monopolist unless they're offered more than they could make from staying in the market, which is in turn more than the cost of entry. So entering the market stays profitable because you either make money by selling to customers or you make money by getting acquired. But the monopolist doesn't actually have an unlimited supply of money for acquisitions, so new competitors keep popping up until they run out of cash and then one of them sticks, or one of them is e.g. a co-op that isn't interested in selling.
To prevent this the monopolist needs the market to have higher barriers to entry. One way of doing this is to become so vertically integrated that new entrants would have to reproduce the entire supply chain to enter the market, and this is the case where you actually need antitrust enforcement, but it also isn't the common case. And it's hard for anyone to get a vertically integrated monopoly to begin with without the common case, because it's hard to monopolize the vertical before you have a monopoly in the original market.
The common case is the monopolist gets the government to pass laws making it more expensive to enter the market until new entrants are deterred.
> Offshoring manufacturing and permitting AG conglomerates to bankrupt the majority of family farmers has resulted in rural communities being stripped of economic opportunities which caused a flood of economic refugees into high cost residential markets. Proof: pundits screech about a lack of affordable housing when ~8 million units sit unoccupied, many outright abandoned.
This is just "demand is not always in the same place as it was before", it's only a problem if you constrain supply from increasing in the places where the demand has moved. This is the same reason you can have unoccupied units and a shortage at the same time, when the units aren't in the same location as the demand. The vacancy rate in e.g. Manhattan is at record lows.
Also, the shortage is by significantly more than 8 million units.
> when zoning changes are made to permit the kind of multi-story mixed use structures that are hyped as a solution to the housing crisis what happens is they get built, the local market gets an influx of condos that nobody who lives in the area can afford and nearby housing increases in cost (a net reduction in affordable housing), literally the exact opposite of the effects advertised.
This is the "induced demand" theory, which is rubbish. There is more demand for higher density areas than there is supply, so the price is high. If you increase the density of an area, you satisfy some of the demand, not only by creating that housing but by increasing the density of that area, which makes it more attractive because it can now sustain more local shops etc., so more people also want to move into the directly adjacent existing housing.
This does decrease the cost of housing, it's just that the housing that becomes more affordable isn't the housing directly adjacent to the new housing. It's in the place people left in order to move there.
What's happening is essentially this: Suppose you have areas with density levels 1, 2 and 3. Level 3 is the most dense, most desirable and most expensive. You increase the density of a level 2 area so it becomes a level 3 area by building more housing. The price of all three density levels goes down across the region, because there are now more level 3 areas available, so you don't have to bid as high to live in one, and some people move from level 1 and 2 areas to the new level 3 area, which makes more supply available there too. But that specific neighborhood used to be level 2 and is now level 3, so it, unlike the region as a whole, can increase in price, because the new level 3 price might still be more expensive than the old level 2 price.
And even that can be solved by building enough level 3 housing across the region so that the cost of level 3 housing falls below the previous cost of level 2 housing, but for that you have to build even more.
> This phenomenon is also driving up the cost of performing clinical trials as these outfits are savvy enough to intentionally target practices that perform trials. The resulting increase in fees to run a clinical trial are so steep they trigger fraud warnings in industry benchmarking software.
To take one example, the US requires separate clinical trials from the ones already done in Europe. There is no legitimate reason to even be doing them a second time, the European ones should be accepted for approval for sale in the US, but they're not. Because the incumbents like it that way, because it reduces competition and they own the regulators.
Another solid example is the entire concept of certificate of need laws. It's quite possibly the most naked example of anti-competition legislation in existence.
> Anyway, given we're the only industrialized nation who's healthcare system isn't entirely controlled by the government this claim seems pretty rich.
There are several industrialized countries with private healthcare systems that are all more efficient than the US system. The US system is notoriously corrupt and inefficient because the incumbents use regulation to inhibit competition.
It seems there are at least two, such as in the case of utilities: best services or best profits for the shareholders. Again in the case of utilities we see time and again that these are mutually exclusive optimums as a privatized utility makes cuts to investment, build out, maintenance, customer service, or other aspects of the business in the goals of increasing profits, to the detriment of the quality of their service.
This is a pretty bad example because monopoly unions vs. monopoly companies is extraordinarily bad to the point of being a plausible worst case scenario. The company is then free to run roughshod over its customers and suppliers and use its resources to capture the government and the union not only does nothing to prevent this but actually encourages it because then they can extract more of the monopoly rents for themselves. Then the normal tendency for the public to demand antitrust enforcement when met with an abusive monopolist is blunted by the union's support for the monopoly and prevents the monopoly from being toppled.
I think you mean neoliberal democracies.
They possibly even managed to buy a luxury car in the years that followed. Or went on holiday more often. Or somehow unexpectedly landed a nice and cush job at said energy company.
So the only way to have a true market is to count on the opposite of human greed.
Well hopefully that works out.
https://www.youtube.com/watch?v=II1GOhoNpms
A healthy debt to GDP ratio (like what the USA has) is integral for a growing economy. Choke on it Austrians.
Even though the UK will be £311bn worse off by 2035 because of it [1].
A decision that can't be blamed on the rich but instead is owned by the ordinary voter. Who then demands the same quality of life they had previously with the same taxation levels. It's delusional thinking and unfortunately no one has the political capital nor guts to correct them on it.
And it's a very different story here in Australia where none of what you/Gary said is true. The state governments are under financial strain because of huge investments in public transport infrastructure owned by the people.
[1] https://news.sky.com/story/brexit-new-report-suggests-uk-311...
The money for these projects is provided by the wealthy through the purchase of government bonds.
Brexit is a problem sure, nobody denies that, but QE of around £1tn since COVID, most of which ended up with the richest (see asset price increases and cash holdings and world stock markets at all time record levels) is even more of a problem as it makes normal people and tax income relatively even smaller so borrowing and taxes need to be increased. And of course we don't tax the people whose assets have gone up enormously until they sell those assets. Quite often rich people borrow money against those assets instead of realising a capital gains tax event or various other loopholes.
I don't know too much about the specific case of transport infrastructure in Australia, but if the government owned them outright without attached debts clearly they would be assets rather than liabilities.
We can argue about the reasoning behind that, but that seems to be what most Brits who voted for Brexit wanted
As a selfish comparison point, the average residential rate for Finland, an EU country known for its recent nuclear developments (great!), is ~$0.25 per kWh, about 25% higher. France, well known for its pro-nuke approach, seems to average ~$0.28 per kWh, or about 40% higher. Germany, which has... Not done so, is around $0.40 per kWh, or about twice as high. Even Iceland, famed for its "almost free" geothermal power, seems to average $0.16-0.18 kWh for an ordinary residential connection - one must assume aluminum plants, etc can cut much better deals with the geothermal plants, through strategies like close colocation, of course.
These are very important factors to keep in mind, even if the absolute numbers seem small. Expensive electricity makes everything else more expensive as well. It touches every facet of our lives in a way not even food does. And making electricity cheaper probably benefits human welfare en masse in a huge way. It's a shame power management doesn't seem to be very attractive to recent EE grads like myself since it pays much worse and requires much more credentialing to break into compared to, say, WordPress development.
It has to be noted that in most EU countries electricity for business is quite cheaper than for households.
https://ec.europa.eu/eurostat/statistics-explained/index.php...
Making the fundamental power generation cheaper is probably still the best lever a private actor can push.
Huh? More like 11-17c/kWh.
- Average spot price for 2024 was less than 6c/kwh https://www.nodesk.fi/sahkon-keskihinta-2024/
- Transmission costs are around 2-6c/kwh https://sahkokuningas.fi/sahkon-siirtohinta/
- Taxes bit less than 3c/kWh
Even if you add all those up, you only get max 15c/kWh.
As of today, you can get 2 year fixed price for less than 8c/kWh, even with that it only adds up to 17c/kWh, with most expensive transmission costs, taxes rounded up and energy price rounded up.
Nuclear energy has contributed to the cheap price, but so has wind power https://www.talouselama.fi/uutiset/te/bfe4f5f4-0329-4cfe-989...
I currently pay a flat ~8c/kWh. I could save by using spot price electricity but as I don't use much, this keeps the monthly cost predictable.
The town must have either been in huge financial trouble or on a privatization kick.
The town may also have been putting other revenues towards the electric utility (so losing money on the service and billing).
It was probably just a mistake though.
My town charges about $0.11 per kwh, with a fixed monthly service fee making the effective rate for a small user closer to $0.20.
Selling to a larger company who hopefully has the capital to fix them seems like a bargain when compared to the cost of replacing a hydro dam (or even replacing it with a non-electric generating dam).
Of course, that does come at a cost, and it's probably spread across all rate payers.
The economists who argue for this, only slightly paraphrased.
The argument is generally that private companies are more productive than public services due to productivity improvements that are forced via competition. There's no such forcing function for a government-provided service, enabling (potential) waste and bloat, depending on governmental competence and oversight.
The correct counter-argument is that there needs to be competition for that to happen. If you have only one electric utility for customers to choose from, the argument is totally invalidated.
Underproductive though is certainly simpler but my understanding is that it was inefficient because the asset owner charging an equilibrium price should in theory lead to higher overall production (obviously lack of competition hurts this).
[1] https://www.parliament.nsw.gov.au/researchpapers/Documents/e...
Unfortunately, I'm sure the folks that signed that deal were long gone before the problems started setting in
I'd guess what happened is this small town generated power and let its people buy it at a reduced rate. GP just didn't get into that level of detail.
https://youtu.be/sH1PVVJuBtE?si=EK4-rmq4CUxw0ttU
The article hedges against someone pointing this out by admitting that Walnut Creek is an unusually optimistic location and that PG&E is also recognizing large expenses related to ongoing infrastructure buildouts, but no solutions are offered for these caveats.
The hidden problem with projects like this is that once you roll these utilities into the city’s budget it’s too tempting to start dipping into taxpayer funds for needed improvements rather than raising electricity rates. When problems arise, politicians try to kick it down the road so it becomes their successor’s problem, or they try to offload the expense onto a growing debt load because that delays the problem to the next generation. It becomes easier to keep the highly visible rate down, but taxes might go up to cover the infrastructure costs instead.
So I’m skeptical. If there was an analysis that showed a drop in rates that was not 3X higher than the profit margins of the private utility I’d be more open to the idea, but as presented this feels like back of the envelope math that generates savings by ignoring all the details that didn’t make their way onto the envelope.
This is addressed right at the beginning of the article. The argument is not that PG&E is skimming off huge profits, rather that it is structurally inefficient:
> Distribution: How much to get the power from your local substation to your house over local power lines. In PG&E's rate chart, they charge 20 cents per kilowatt hour for this. That just does not match up with how much it actually costs them to transmit power over local lines and keep the lines maintained.
> Everything else: Operations, maintenance, profit. This is where PG&E is actually seeing large expenses, because their coverage area is massive, it costs a lot of money to deliver power to rural customers, and they are also undertaking a massive project to underground utility lines in fire-prone areas.
The backstory here is that PG&E underfunded maintenance for decades while paying out substantial dividends to shareholders, and now that fires are killing lots of people, they have to go back and properly maintain their network.
Now, you can make the case that CA as a whole might not be better off if cities leave PG&E and the state has to subsidize rural power delivery even further, but I think the article is correct on the question that it tackles.
This is why Santa Clara, Palo Alto and Alameda's power companies can deliver power for half of what PG&E can. You can just copy their cost structure.
Boulder CO tried municipalization with Xcel and the gap between the city offer and Xcel position was very large. How do your figures look if you double the price and/or add in a decade tail of having to pay 25% of billing to PG&E?
The small munis you mention are in the same position as PG&E with respect to owning decades old poles and conductors with decades of life remaining. The incumbent has all the cards in this negotiation. An existing muni can do it cheaper for the obvious reasons you stated - legacy network, all the customers are close together. Buying the most profitable bits of the PG&E network at a price they would agree to would not be profitable.
Financing at 4% interest is not the expensive part though. Even if the price was $1 billion it would be 6 cents per kWh.
I agree it would be bad if they had to fight in court for a decade! But you have to start somewhere and as I mentioned you might get a good outcome just from threatening to do it. My hope is the CPUC would force them to accept some offer.
Ideally, rural areas pay up. Good forcing functions for change. Maybe people move closer together (similar to European villages) or they become energy-independent (solar panels).
If that's politically untenable, then I'd like to see the cost reflected as a city2rural subsidy. Cities get enough hate in the US. I'd like explicit recognition of their generosity.
Density including the towns is about 3.2 people per square km.
Looks like people end up paying close to $0.30 per kwh. There's probably some cross subsidies coming from the state, I don't know.
Optimizing for factors other than universal service is completely valid, but I’m guessing each of those municipal power systems pre-dated rural electrification and thereby get to somewhat free ride on the system more than anyone would reasonably allow Walnut Creek to do in the year 2025.
There is also a huge moral hazard problem where we make it cheaper than it should be to live in fire zones by subsidizing electricity and insurance. So people build a lot of houses in fire territory that burn down.
In the meantime we make it more expensive to live in the safe places. We should stop doing that
https://www.youtube.com/watch?v=7Nw6qyyrTeI
The real benefit is that the people who don't have any reason to actually be rural, say remote software developers, will now have to either cover their costs rather than externalising them, or move to the city.
A $100 million project to bury the lines to 1000 houses is $100k per house which just ain't worth it. Not saying this is a real number but it could easily be if it's costing $0.20/kWh to do distribution.
This is very similar to how Africa will leapfrog the legacy model with cheap solar and batteries.
In Australia, they have a model of colocating stationary battery storage in neighborhoods to balance buffer solar production locally for time shifting purposes (vs shipping that power far only to bring it back in the evening).
The local solution to solve local problem absolutely works, but that is not what you are describing.
Africa is not going to substitute a continental scale grid with solar and batteries. That's just pie-in-the-sky levels of delusion.
Without them the grid is like a bunch of dominoes where a failure can cascade unless grid operators, or automated systems, react fast enough. Battery systems are like power firewalls; if the main grid goes down, the battery keeps right on chugging.
If circuit protection devices or an equipment failure happens on a main transmission line, the utility has hours to fix it, and meanwhile everyone has power. Ditto for maintenance. Need to replace that big huge switch that feeds part of the county? No problem, just...shut it off. Long as you're done before the battery bank runs out, everything's fine.
Right now you can end up with situations where a power plant will "trip" and go offline, such as when a large amount of load is disconnected due to a transmission line failure or substation failure. The grid frequency goes up if the power plants on the grid can't throttle back fast enough, and instead, to keep the grid from going over-frequency, the plant goes offline entirely.
If a lot of areas are on battery - those systems can be commanded to start charging to stop the plants from speeding up. If the grid goes dead, it's not nearly as big a deal, because the grid operators have more time to do things like sequence the re-connection of all those areas.
I'd imagine that with a bunch of battery systems distributed around a grid, they could potentially be able help black-start a plant if needed.
Battery systems also reduce the need for a transmission line upgrade; when demand is higher than the line's capacity, the battery system steps in. When demand is below the line capacity, the battery system charges.
All the microgrids you describe provide basic needs. None power serious industry anywhere.
Batteries are a good solution for certain situations, not as a fix-all. All the batteries in the world can power a large power system like California or Quebec for minutes. That's right - minutes.
https://www.undp.org/energy/africa-minigrids-program
https://www.worldbank.org/en/news/press-release/2023/02/26/s...
https://www.esmap.org/mini_grids_for_half_a_billion_people_t...
https://www.nrel.gov/reopt/projects/case-study-sub-saharan-a...
It's a very problem to the healthcare market. Health insurance also has fixed profit, therefore there is a huge incentive to drive up costs. Better to make 15% on a $10,000 drug then 15% on a $10 one.
Even smaller order of magnitude than executive comp
>offsite team building exercises in Hawaii.
Source this actually happens to an extent that would materially affect the balance sheet?
Private plane: https://www.sfgate.com/business/article/executives-at-pg-e-h...
You hire your buddy’s company as a consultant or contractor, too. At a sweet rate.
The power company wants to cut corners. The government wants to prevent that. So there is constant lawfare between governments and highly regulated companies, with neither really caring if it leaves the customer out of pocket (since regulators can blame the bills on the company).
The company outsmarts the regulators so the regulators carpet bomb them with so much regulation that they hope it will plug all the loopholes. The incentives between them are simply too far apart. And with inbuilt market failures (due to it being a monoppoly) you don't have effective market mechanisms that allow the government to just set basic safety standards and get out of the way.
It's closer to the USSR than social democracy. http://highered.blogspot.com/2009/01/well-intentioned-commis...
See also, healthcare.
https://news.ycombinator.com/newsguidelines.html
The expectations, regulations, and imposed demands, are not 100% identical across all utilities. So any combination of factors could lead to higher prices.
It makes no sense to forego $0.80 in your pocket because you do not want the government to get $0.20.
I’m far from expert here, but is that too simplistic?
Where does perceived future value come into this? I’m thinking of companies like Amazon, which kept profit margins low while obviously having their shit together.
https://companiesmarketcap.com/
Amazon clearly has a mix of a high profit margin business (AWS and other services) with a low profit margin business (retail).
You will notice that most the top businesses are pretty much high profit margin tech and pharmaceutical businesses. Some oil and finance after that. And there are a few lower profit margin, but still large profit since the business is so large, but obviously, high profit margins and high profit is better than low profit margin and high profit.
I don’t have some special insider scoop to know whether the numbers listed in the statements are real or fake.
I was asking a general question of the motivation for large corporations to avoid having profits on paper. I asked the question rather than claiming it as a statement because I am less confident in the details and want to raise the issue without presuming that I know exactly what I'm talking about on the topic.
That is assuming you’ve taken the effort to read the filings.
If your lookkng for easy generalizations that applies to all public companies then no it doesn’t exist. You have to put in the effort to read each individual statement.
Its worth noting that reading financials still doesn't make me an expert in the area and I'd still be making a mistake to assume that means I understand well enough the games or motivations behind the numbers on a page.
https://www.alamedamp.com/DocumentCenter/View/1268/FY25-Rate...
Edit: Oh, this utility runs at a profit and has for decades. The profits have been going into undergrounding transmission lines
Maybe you just mean to tack on the idea that we could benefit from having better language to separate shrewd and incompetent investments, in which case I'm ~fine with some language to retcon the difference between merely lighting investments on fire and using them to drive an engine back on to those investments once we know the difference.
But if you mean to suggest that it's pointless for us to bother discriminating between profit-taken and investment-(effective|ineffective) just because we don't know whether the cat is dead or alive yet, then I suspect I disagree to the death.
(Edit: In case I'm being obtuse, I at least think I agree that "investing" surplus in hiring and retaining great employees is a surplus-invested, and not a profit-taken.)
So the executive compensation packages that many people hate on then are just a mechanism to reduce the profits of the company. And it’s not clear to me that Apple saving up profits so they can make larger investments without taking out loans is a strategy we want to disincentivize either.
My point is that designing top-down incentives at market scale are very difficult and while attractive are basically the central failure of central planning. Even setting aside the challenge of figuring out how to word the incentives correctly in a way that maximizes gain and minimizes gaming of the system (basically impossible) in a political system you also have to get buy in from people who don’t see it your way which muddles your ideal solution regardless of you being right or wrong. I’m highlighting that’s how and why we have the current tax system - it’s many many people trying to tweak and optimize incentives and curtail problems over a long period of time.
I wouldn't say surplus held to be invested, even for many years to support a large capital project, is profit-taken. The surplus isn't being taken. (But, as before, I do still think it may be worth discriminating between related/unrelated, because this is somewhat relative. A large for-profit utility could extract surplus from most of its regional markets and plow it all into supreme resiliency for the city its headquarters is in...)
Designing good incentives or tax policy are very different problems than having slightly better vernacular for average people to use to distinguish between patterns of organizational behavior that throw surplus in a bin for a truck to take away and those that toss it in a compost pile for on-site use.
Accountants and auditors can classify inflows and outflows however they like--but I think specific problems like good incentives are more tractable when common people can leverage simple language to build the understanding and support that policy wonks will need to dial in incentives or tax policy.
The payout ratio is the percentage of net income actually paid out to equity investors.
For utilities it's around 50% of net income, though it obviously depends
And yet somehow Americans will never see this and think "If only it were government-owned so the profit could be returned to the people"
About half the price of PG&E. This is in an otherwise PG&E area. People should be demanding their city handle power. It leads to half the price.
My power is significantly cheaper than yours but it comes from a private company.
Picking random cities doesn’t tell us anything at all about costs or efficiency. Different areas have different costs and expenses.
You have to compare apples to apples.
Stanford endured lengthy PG&E power outages while the municipal utility continued to operate. However, the university probably has negotiated rates that are lower than what regular PG&E customers pay in Palo Alto.
PG&E customers are paying very large amounts for the consequences of bad infrastructure causing wildfires and other legal costs which are being paid for with higher rates.
Example:
https://www.ewg.org/news-insights/news-release/2022/12/pge-a...
They just get blended into the tax bill.
Their costs get shouldered by their customers and their stock price. (they really should issue shares to pay their bills to dilute their stock price and cause their existing investors to lose money). In any case it's not going to get very willingly picked up by the government.
PG&E's liabilities aren't going to be put into taxes.
It's not the state government taking over PG&E, it's individual municipalities leaving the PG&E network and forming their own utility to buy wholesale electricity (or make some of their own) and distribute it to their citizens... resulting in a large reduction in cost in no small part because they no longer have to pay for PG&E's liabilities.
They’re saying that the cost of providing electricity to the cities, where everything is densely located and there are fewer trees and fewer overhead lines needing under grounding is lower so they should charge less to city consumers.
They imply that the bulk of the cost is delivering power to the richer consumers further out because there’s a lot of line miles that need under grounding. That’s probably accurate.
But utilities are restricted from pricing like that because you don’t want utilities triaging customers that are less profitable. The article here makes the argument that the far away and expensive customers are rich, therefore fuck ‘em. I’m not familiar with California but I doubt this is true across the board. There are surely notably rich communities far from the city but surely there are also poorer areas further from the city that are relatively cheaper because the commute is worse.
Utilities should be legally required to serve everyone in their area, but they should also be allowed to charge the real costs for the service. If the government thinks that's unfair to people living in rural areas, it's free to use tax money for explicit subsidies. But the subsidies should only be 70% or 80% of the excess costs, to give the people in expensive areas some incentives to find more efficient solutions.
It's even worse in housing, where developers are often required to build below market rate units at their own expense. It makes new housing less profitable, and less housing gets built.
“The people” in expensive areas have literally no agency in finding an efficient solution. They don’t have any say about the utilities grid investments. In most parts of the country “these people” are also poorer.
If grid power is artificially expensive in urban areas, people will install solar panels and batteries in situations where it doesn't really make sense. And if grid power is artificially cheap in rural areas, people will not install solar panels and batteries in situations where it makes sense. Thus incorrect pricing leads to inefficient investments.
Many economists even argue that the most efficient form of subsidies is cash that can be used for any purpose. Instead of getting cheaper power in rural areas, you should simply receive $X/month for living there. But the assumptions needed to make that claim are a bit too restrictive for many real situations.
Solar panel and battery investments reduce your demand for power from the grid, and in many rate cases will reduce your energy bill, but they _won’t_ reduce the costs of maintaining the distribution grid assets connecting you to the grid that need to exist even if you only use them 0.1% of the time. People with solar panels are the worst offenders as they can end up paying nothing, or perhaps even net receive money, despite still requiring investment from the utility.
Accurate pricing of power is very very difficult. Whose energy should cost more? The 10k residents with 5 miles of overhead lines being undergrounded this year? Or the 1k with 15 miles of overhead lines that won’t be under grounded for 5 years? Are you prepared to impose a $50M capital investment cost solely on the consumers that use it? Uh oh. Turns out customers oppose an huge hike in their energy bills and are demanding you DONT underground their lines. Are you going to charge consumers extra because a car ran into a pole that’s specifically on their feeder? The risks of something like a forest fire affect everyone, even if it’s on a line that serves just one person.
This stuff is very complicated. The elephant in the room is that under grounding distribution networks in places like California is simply far too expensive for the kind of budgets they have.
The issue is generally that American grids have WAY MORE overhead line miles than European grids
The Rural Electrification Act not only brought power to rural areas, but also jobs to Americans when they were most needed, and countless follow-on benefits: increased farm productivity, longer lifespans and higher quality of life, etc.
It’s also not that subsidized compared to many other industries; the entire point of co-ops is purchasing something in bulk, with no one taking the profits. They get loans, yes, but the default rate on them is absurdly low.
And on that point, electric co-ops consistently produce reliable power at a lower cost than privately-owned utilities. I’ve experienced both, in multiple areas of the country, and by far co-ops beat everyone else.
This doesn’t even touch on the fact that the infrastructure enabled by the REA is also the only reason high speed internet ever made it to rural areas. Fiber everywhere should absolutely be a goal.
I recently extended a line about 1000 feet. For this, I paid $13000 -- primary transmission, poles, anchors, electricians, transformers, all at full rates. And it was a required donation, as in the power coop owns everything and it goes on public easement on to the next guy when they extend from mine. When they finished, I worked myself silly digging secondary transmission to where I was used on the property.
It is the other way around, rural people shoulder the costs of massive mileage of the grid extension that aid intercity networking. The costs are privatized but the benefits are socialized.
Much / all of this is arguably necessary for national security viz. food production, but I dislike when people in red states (not saying you’ve done this, just making a tangential point) make comments like, “let’s see how long the city lasts if we stop exporting food.” Uhhh how long do you think you’d last without practically every aspect of your life being subsidized?
We need both groups in the country, and we need to support each other as each needs, but part of that dynamic being healthy means acknowledging that we’re receiving help.
1: https://www.google.com/maps/@39.4301203,-122.0649005,3a,60y,...
2: https://www.google.com/maps/@38.3962909,-120.5056754,3a,75y,...
If I underpaid the coop defrauded the other members by charging them instead.
The same is true for all infrastructure in that it gets less expensive per user as density increases. The cost to hook up an apartment building to the grid is a few houses in a suburb but services 10x the people at the same revenue per person. The cost to service a single home in a rural area might wipe the revenue out from a dozen apartments.
Frankly, I’m sick of subsidizing the rural welfare crowd. Let them pay the market price for their roads and utilities if they want to cosplay as Galt gulchers.
This works amazing as taxes and subsidies are basically zero. You pay for what you use.
It’s funnier if we alter it a little, is it more or less true this way?
>> It's also clear that rural voting was a huge error. People should live in clusters of at least a handful of structures where it's practical and affordable to provision government (and telecommunications), or they should be off the grid altogether. What we built in the 20th century was the worst possible thing: dispersed houses. This should never have been built and we should not perpetuate it with subsidies.
US suburbs have problems due to single-use areas and forced low density. But you will aleays have some area that don't pay a lot of taxes.
Because of this clustering - I live in a pretty rural area - but have natural gas and cable internet (only one option, so not that awesome).
But, I also have a well and a septic system. And I'm very thankful. As I was moving back to the US after 2 decades in a city, I did a winter with no high speed internet (used a mofi router with a SIM card as Starlink was overprescribed in the area) and propane for heat. It was a small house but heating with propane is crazy expensive.
And I assume your food would be conjured magically?
Rural areas aren't just a farm all by itself. Farmers need schools, stores, supplies, workers, you know, rural areas.
As well, when we electrified our nations, most people lived on farms. At the start of the 20th, as an example, most Canadians lived in rural areas. The reverse is now true.
This conversation is absurd. Hydro Quebec runs power lines through areas far more rural than California, through weather more severe and wide ranging, over greater distances, with more wild land, and just as much danger of fire. It does so at the cheapest rates, shows a profit, maintaining its lines and clearing vegetation.
PG&E is a pathetic company, and if people look outside of California, you can see how cheap rural electrification is
Really, cities cost more to electrify. Burying lines is mega expensive, stringing power lines on poles os quiet cost effective. You can easily run miles of lines, for the cost of a crew digging up a street and repaving.
Lastly, rural people pay for hookups. Each house often pays thousands per pole.
It also has massive snowstorms, ice storms, which bring down vegetation, and ranges from -40F up to 100F yearly, depending.
We can nitpick on specifics, but by no means is California more rural, or more forested. Quebec is also far less populous, and has a far more hostile environment.
Hydro Quebec does well, because vegetation is cleared, maintenance is performed, and corners aren't cut.
Unlike PG&E.
Isn't this my point? It is practical to punch transmission lines through any place. It is much more difficult, risky, and costly to maintain a fractal distribution network to individual customers in certain places due to geography and climate. If you parachute randomly into Quebec you'd be walking for a month before you met anyone. Same is not true in California.
Less populous can also mean more rural, and that was my point.
You talk about houses in the middle of no-where, and Quebec has that in spades. And it's not expensive, it doesn't cost, it's revenue generating, and not part of the problem.
If Quebec can do it, generate massive profits, and have mega-low rates, and do rural far better than California, then "rural" isn't the issue.
https://cwfis.cfs.nrcan.gc.ca/maps/fw?type=fdr&year=2024&mon...
Don’t make shit up. Quebec fire risk is much, much lower than California. Both companies have to maintain vegetation around the lines. HQ’s risk of vegetation outages is outages for some customers on a feeder. California’s is the state burns down. It’s just not remotely the same.
I’m willing to believe HQ does it better but the challenges ahead of them are wayyyy different
Sacramento with SMUD is another success story. But there are some differences with economies of scale
That's possibly because of a strong underestimation of the actual indirect inefficiencies that come with shareholder profit-oriented companies. Every investment is seen not as a way to maximise profit in the long run, but as a direct decrease in shareholder profit, and should therefore be avoided at all cost (ha!) or postponed for as long as possible.
Strong counterexamples, admittedly not from energy companies, can be found in the remunicipalisation of the water supplies in Berlin and in some districts of Paris. Both came with drastic decrease of user costs, better water quality and a decrease of outages.
As well as Palo Alto's utility financial statement which is linked in the post.
Exactly. The cherry picked example in the article was chosen to ignore areas with higher expenses.
> For another, corporations are often okay overspending on executive compensation
PG&E had $25 billion revenue last year. How much do you think they spent on lavish executive compensation? Even if you could eliminate $100 million in compensation (doubtful) that’s still less than 0.1% of revenues. People overestimate the impact of executive compensation in large companies by orders of magnitude.
> and other lavish business expenses for tax purposes.
Again, you’re not going to find dramatic savings anywhere in the budget by cutting lavish business expenses at this scale. It’s noise. There’s also a persistent myth that companies can spend their way into saving money via tax write-offs, but for some reason my accountant tells me that’s not how taxes work.
Or in other words, companies aren't overspending on exec compensation for tax purposes. They're doing so because the board is not exercising proper financial control over the company.
One detail is that PG&E is a heavily and (IMO) incompetently regulated utility, and their profit margins are more or less set by regulation. So they inflate costs to drive up profits, and one should not assume that the only room for savings is removing their profit margin.
I do agree with your sentiment that city bureaucrats may be tempted to raid the energy business to pay for pet projects and other things. This can be protected against by segmenting the energy business into its own protected organization.
Administrative and legal costs don’t disappear when the city runs it, so why does it matter? When the city runs a utility, nearly all of the costs associated with running a utility still exist.
If your mental model of a city-owned utility is that they’re going to generate power and sell it at cost with no administrative overhead, you’re really just assuming that administrative overhead will be covered by taxpayers.
Electricity rates down, tax rates up.
> How is other states like Texas or Colorado are delivering at 10-12c/kwh ?
Texas produces the most crude oil, natural gas, and also wind generated electricity. A quarter of the entire country’s wind energy generation happens in Texas.
Comparing electricity prices across regions is meaningless. Everything is too different.
It is stereotyping, but it sounds like the sort of state that has a strong regulatory regime that would be quite controlling about what people can actually do. I note the irony that when Texas had a power outage everyone wanted much more regulation to force changes to grid maintenance, but when California spends 4x as much and PG&E skips on grid maintenance everyone throws their hands up because they can't call for more regulation and are out of ideas. The regulation doesn't seem to have dodged the maintenance problems but I'd bet it drives the cost up.
https://www.siliconvalleypower.com/residents/rates-and-fees
PG&E has an 11% margin on those rates because they keep burning the state down and having to pay for it. Municipal utilities don't have to worry about that.
The only thing that could be seriously considered a downside is that Santa Clara, CA is now absolutely jam-packed with data centers that have low employment per sqft.
The number of people that pay for-profit companies for natural gas (heat), electricity, and water in North America is absolutely bonkers. There is a specific concern about foreign corporations purchasing water rights in the American west.
I’m lucky enough to be in such an area. Note the city takes a bit of the above as profit too. Not that that’s a bad thing but it just goes to show how beneficial it is and how much more you’re paying by not doing it. Every city should do it asap.
Of course, none of this is exclusive to one or the other.
And private utility companies are?
What isn't effective is electrification and maintenance of low density regions although power monopolies like PG&E are required to provide service. The urban and suburban customers are effectively subsidizing the cost of transmission and maintenance for rural customers.
PG&E doesn't want their most profitable customer base[cities] to have public utilities because if enough do, their company becomes unprofitable and implodes.
This is exactly the reason we should do it.
Urban development subsidizes everything.
Go watch some Strong Towns.
Fuck suburbs, unless they were built around a streetcar.
> PG&E doesn't want their most profitable customer base[cities] to have public utilities because if enough do, their company becomes unprofitable and implodes.
If the state forces PG&E to electrify expensive areas at the expense of higher costs in cities, their objections are reasonable.
If California forced a private company to electrify rural areas as part of the deal and then tried to change the rules to have the government take over the cheap areas, there would be easy lawsuits on the table.
I left California last century but seem to recall the PUC(?) has a pretty tight reign on what PG&E does and doesn't do.
Hopefully no one manages them and that forces residents to move out and stop being a drain on society.
To put numbers on it: for a 12 kW system in Chico, CA (a location at ~40 degrees N I chose arbitrarily) the NREL calculator at https://pvwatts.nrel.gov/pvwatts.php gives annual generation of 18500 kWh (40 degree inclination). For a lifespan of 20 years at $0.34/kWh this is $125800 worth of electricity. A 12 kW + 16 kWh LFP battery system costs something like $36K (+ installation and financing).
The most significant is that modernity comes with immense demands on reliability and capacity. The solar estimates are based on averages. There will absolutely be times when your solar and battery system runs out of power. What then? What if you decide to buy an EV? Can you depend solely on solar?
You cannot replace the grid, no matter what the simulations tell you. The whole reason the electricity grid was created in the first place was to solve problems of local resource constraints.
> PG&E continues to demand huge payments on routine power grid connections. For example, the cost to comply with PG&E’s latest requirements for the City to use public power to connect streetlights, traffic signals and other small loads would exceed $1 billion.
https://www.publicpowersf.org/en/faq
I think either we need the political will to use eminent domain to take the grid back (i.e. set the price through a legal proceeding), or we'd need to build a duplicate distribution grid and then abandon PG&E.
I don't think the CPUC will let them get away with "we won't sell at any price" - I think the regulators would force them to sell at some price.
Has the CPUC forced such a sale before? Functionally, if PG&E can just safely gauge what's likely to be out of reach for each city, they can name a price detached from reality and be confident of maintaining their stranglehold.
Instead, slowly build out, in parallel, the upgraded – which is to say, underground – infrastructure that PG&E refuses to build.
A community could do this opportunistically on a schedule that tracks the normal repaving of roads.
[1] https://www.a2gov.org/sustainability-innovations-home/sustai...
https://www.cpr.org/2020/11/20/boulder-ends-decade-long-purs...
It's similar to public transportation. Most cities don't design a system, they order it from a catalog - and they pay private consultants (similar to Oracle consultants) to tell them what to do. There is so much corruption and privatization there, but unlike power there is no business case that would make it attractive outside of public funding.
"PacifiCorp Was Grossly Negligent in Oregon’s 2020 Wildfires. Now It’s Asking Lawmakers for Protection."
https://news.ycombinator.com/item?id=42971311
Because of regulation, they can gouge consumers who are captive to the damage, literally and financially.
Are there any germane examples of your “These formerly ‘public utilities’ are now often owned by PE or Berkshire Hathaway” claim or is it just a complete non-sequitur?
And, I did put public in quotes because these utilities, while privately owned, do benefit from regulatory capture that seems out of place with a privately held company. And they often operate on or over public lands.
And, having lived through the fires in Oregon and seeing the trauma first hand, I'm still angry.
That's my takeaway from the article but I'm willing to listen and learn. Your points are valid and show how mistaken some (or all) of my conclusions are based on false connections.
Seems like they're actively trying to fix it.
Rochelle's municipal utility system also provides water and sewer, and fiber-optic internet. https://www.rmu.net/
Austin Energy earns no profits and pays no federal income taxes. All revenues benefit the customers of Austin Energy and the residents of the City of Austin. The primary financial benefit to the City of Austin is Austin Energy’s transfer to the General Fund, which is set by policy and allocated by elected City Council members to municipal purposes such as fire and parks.
https://austinenergy.com/about/company-profile/numbers
Inexpensive, reliable, and heavily litigated (just how I like my local utility).
People hate it and there has been a big effort from activists to turn it over to public hands. The local politicians are on board for the most part, but the company is of course fighting tooth and nail.
Utilities (generally) have a universal service obligation.
If someone can cherry-pick just the denser areas with lower distribution costs, of course they could "undercut" the utility with the requirement to serve everyone.
(I'm not saying that PG&E couldn't be better managed. I'm saying that there's a much, much deeper policy issue at stake here.)
I grew up in the Bay Area, lived in 'rural' Humboldt and Placer counties, and can say I would never move back to the bay no matter how much the technocrats would desire it.
Pretty happy with my ~30k town nowhere near California TBH...
Smud was very helpful and had a simple process while PGE wanted proof of business usage amongst other stuff (heard this all second hand though)
It's perverse that people who live in safe, urban areas are subsidizing people who live in wildfire zones. The savings come largely from not doing that anymore.
- Urban customers should have an incentive to use electricity over gas, which they would if rates were reasonable.
- Urban customers should not pay per kWh even if one thinks they should subsidize rural customers. It should be some kind of tax with reasonable allocation.
- Undercharging rural customers for provision of service and overcharging per kWh messes up incentives, too. If suburban or rural communities faced the actual cost of transmission to their area and distribution within it, they could make real decisions, for example:
# Technologies exist to reduce the risk that a power line fault starts a fire. Search for “ground fault neutralizer” or “REFCL.” Similarly common reclosers take a very YOLO approach to deal with a faulted line, and other approaches exist. PG&E, of course, doesn’t want to use these because the ridiculous CPUC rules let them make more profit by spending more money trimming trees.
# Communities could maintain their own lines and have actual locally enforced codes about vegetation.
# Communities could install batteries at their end of transmission lines to help ride through public safety power shutdowns and to level out their own loads. And they could even build small wind turbines optimized for operation in high winds (which are rather strongly correlated with those shutdowns) to generate a few MW and keep those batteries charged. Heck, this could be automated: de-energize the line when the wind is high automatically, and there won’t even be a substantial inrush when re-energizing when the wind stops because the batteries can reduce load to zero.
# A community could decide the cost isn’t worth it and build its own mini grid. This might spur interesting investment into things like small modular reactors :)
- The ownership and regulatory structure right now sucks, amplifying all the problems above and the lack of real solutions.
If we stop subsidizing the foothills by creating urban utility districts it would solve the PG&E problem.
We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program.
Long term I think this is the only sane way forward though.
But people in those areas are likely to be able to benefit from solar, so maybe being "off the grid" in the sense of not having long runs of power lines surrounded by trees to your house in the country is reasonable, and perhaps also cheaper for those rural residents anyway?
That sounds like more of a solution than a problem: those places are going to burn, so it's better that people stop living there.
It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist.
There's a difference between people that are in farming/ranching and industry vs. people that are rural to afford a more lavish home in the woods or on the hills.
Even still, a system that doesn't appropriately price and apportion risk will always be under pressure.
Very well stated, I am stealing this. Also in agreement with rural resource types vs rich rural.
Again I think it is more complex than just apportioning power costs. CA effectively has a state policy of not maintaining its forest/rural land (ditto feds and their land). My parents live adjacent to national forest and have fire evacuations nearly every year.
There is nothing that the rural residents in their area can do to mitigate risk, even at their own cost. So we're asking them to bear the cost of the state/fed policy decisions. This is exactly the problem you describe of inappropriate price/risk apportionment.
They mitigate by building fireproof homes and leaving when the fire comes. Or just not living there.
Unless you’re referring to farmers I don’t understand this point. As of right now it is the other way around.
- we get rid of nimby enabling laws
- don’t subsidize rural customers
- automate farming
But what people forget is that the CA state doesn't want PG&E.
The state already exerts significant control over PG&E operations through the CPUC (members nominated by Gavin Newsom). CPUC approves/rejects all capital spending down to new fences for electrical substations. You can read about all the decisions in the 931 page rate decision, which is public.
https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K...
But what about executive compensation? Well, a separate CA state agency approves that as well.
https://energysafety.ca.gov/what-we-do/electrical-infrastruc...
So at this point the CA state government basically runs PG&E. But if they purchased it, they'd be exposing themselves to all the political risk when things go bad.
But right now, they get political air cover. Despite the tight level of control over how PG&E is run, the CA state government gets none of the blowback.
It's the optimal setup from a political perspective.
I don't think so. Not currently.
"nor shall private property be taken for public use, without just compensation"
That's federal law. Supposedly, that applies to the states through the Fourteenth Amendment. All of the sudden, once the Fourteenth Amendment is passed, the Constitution applies to state governments, not just the federal government.
So if that's the case, no. You can't just "scoop up the assets for free" because you can't take private property for public use without compensation. I'm kinda a little bit suspicious that it makes sense to interpret the Fourteenth Amendment that way. Sounds like a power grab. If you want to try and turn that around, I know just the guys to do it.
That's not the question under consideration.
The question under consideration is if it constitutional for the government to "impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free".
Under my understanding of the law, no you can't do that, due to the takings clause and it's incorporation under the 14th amendment.
I think the law should be different, I don't agree with incorporation doctrine. But I still don't think the government should impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free.
Hopefully that clears everything up for you.
This is how public transit companies were generally acquired, but on the way to bankruptcy firms would defer maintenance to stave it off, which led to the sorry state of most mass transit systems today.
We should be doing more really in our current world. I confess I too spend too much time trying to build little apps just for money.
This just for money thing has got me reflecting a lot lately.
Everytime there is a natural disaster in the US the press report xxxx houses without power. US leccy firms pride the bear minimum service, always. Profit comes first. Delivery second priority at best.
This doesn't ofter happen in Europe because they dont profit cream and builds reliable redundant grid for almost everone. The grid even extends beyond countries boundaries, with neighbouring countries supporting each other.
Some folk out in the sticks, who you might think don't matter, provide useful services to the city folk. Eg farmers.
I.e. Cost the grid not the city.
You probably are being ripped off in the US, but that's a different story to the one being told imho.
Careful what you wish for.
I agree residential electric infrastructure in the US is not nearly as good as it could be. Buried power lines in suburban environments alone could probably cut outage numbers at least by half; but as one of the first countries in the world to electrify, doing that is a lot more expensive than in developing countries. Sometimes there is such a thing as a first-mover disadvantage!
If you see something you disagree with here please treat it as "I implemented notepad.exe in elisp" level of not even wrong.
Yes you can start it, but should we bow to political pressure to put off maintaining infrastructure? No. There's a real cost to maintain this stuff. But a political force doesn't want to raise prices so it gets depayed.
Sounds like an argument for ABAG to expand its energy related services into a full utility (at least on the electricity side): https://abag.ca.gov/our-work/energy-infrastructure
I think that reflects the broader public. If you can get people in one or the other mode, they will forget what they knew 24 hours ago.
Personally, I think private ownership and public ownership are two tools in the toolchest, good for different tasks. In many cases, privatization is a capitalist who notices a large, reliable cash flow, such as public utility revenue, and wants a cut of it. Public ownership can suffer from a lack of innovation - perhaps that matters less for mature technologies.
In our area, they handed over all school bus services to a private firm. The number of drivers, buses, and routes do not change. How was it supposed to save costs without degrading the service? The answer is, it did not. But administrations were diluted that they could take it off their liabilities.
Our governments should provide these services to Citizens at no cost to them.
We already pay for the maintenance costs and infrastructure is already built out.
Charge the companies for the services, and give them to the populace.
But, but, but, that's socialism! Taxes are socialism. Take from the many, use that spending power to benefit the people.
An enterprise, like providing a utility, has revenues and it has costs. The difference between the two can be called the "surplus labor value". What happens to that depends on the economic system.
In capitalism, capital owners own that enterprise (utility) and they siphon off profits raising the costs. Put another way, capital owners own the means of production, not the residents of the city or the city itself. This is rent-seeking behavior.
In a socialist organization of the economy, the residents either directly or through the city itself, would own the utility. Any profits would go back into the utility or be extra revenue for the city but there's really no incentive to increase prices on the citizens who own the utility (unlike the unquenchable thirst for increasing profits for capital owners).
I have to constantly point out that capitalism isn't markets (market existed thousands of years before it and exist in every economic system). Capitalism simply supplanted feudalism by replacing kings with billionaires. That's it.
We have abundant examples of how the latter is a substantially better system. Just compare EPB Internet (Chattanooga, TN and surrounds) vs Verizon, AT&T, Comcast or Spectrum. Municipal broadband, without exception, is substantially better than any national ISP. The only thing that keeps national ISPs in business is more rent-seeking behavior such as lobbying for legislation to ban municipal broadband.
Given this is the Superbowl weekend, it's worth adding that the Packers are owned by Green Bay (an arrangement the NFL now bans for any other franchise). What do we see in other cities? Teams extorating massive tax breaks from cities, counties and states to build massive stadiums at taxpayer expense without the team having to give up anything. The KC Chiefs are rumbling about leaving because the city didn't pass a sales tax increase to pay for upgrades to Arrowhead Stadium.
I don't know why anyone is surprised by any of this anymore.
It was the whole model that was doomed. Basically to set up a service on Minitel, you had to ask permission from France Telecom. You had to go to the old guys who ran the system, and who knew absolutely nothing about innovation. "It meant that nothing new could ever happen. Basically, Minitel innovated from 1978 to 1982, and then it stopped," he says. But others are less critical. Valerie Schafer, Thierry's co-author, says "the way Minitel is now fobbed off as risible and old-fashioned" is unfair. "People forget that many of the ideas that helped form the internet were first of all tried out on Minitel. Think of the payment system, not so different from the Apple app-store. "Think of the forums, the user-generated content. Many of today's web entrepreneurs and thinkers cut their teeth on Minitel," she says. "The world did not begin with the internet."
> Usenet
That is FOSS and P2P collaberative (at least on the server level). Is that somehow connected with government?
Overall it reads like any other socialist argument for nationalizing (in this case "municipalizing") companies, which does not work both on theoretical grounds and based on historical experience. The claim "Walnut Creek could borrow from its utility in recessions, and loan money during booms" is laughable. We know how that ends: the city would finance its deficits with utility money until the company is bankrupt.
You could literally have half the power bill tomorrow if CA would stop taxing it.
With usage based bills, people with solar pay less than their fair share for the maintenance component of a utility's cost, which means that this cost is larger for the other rate payers. On top of this California has huge subsidies to early rooftop solar adopters. This structure hurts lower income people more since lower income people are more likely to rent and apartments don't have as much space for / not as interested in rooftop solar.
So the CPUC started exploring different models for adding a bigger fixed charge to the bill and lowering the per-kwh cost. Of course the rooftop solar installers hated this as did the different "equity groups." Which is where you got the idea to adjust the fixed charge based on income.
I don't think it's a great idea but I at least understand where the CPUC is coming from. We probably need more innovation in utility pricing models.
The issue I have with this idea is that it basically punishes initiative or people who invested in energy efficient products. What’s the point if you can just wait and juice the other guy? Is the climate change a deadly serious issue or not?
Similarly, the part about taxation is self-inflicted wound, where they could have came up with a subsidy, that would have much less complains.
It is best as it is today: a consumption tax, like the gasoline tax. What justification is there for charging a higher income bracket more for electricity? You could make the "infrastructure maintenance burden" argument about anything: food, movie tickets, etc.
https://www.sfchronicle.com/california/article/pge-electrici...
Half of 50c even if I believe you is 25c still higher than 17c.
So even if half is tax, it’s still a lot more. And, half of Santa Clara’s would also be tax.
My heat (for both air and water) is provided by the building's boiler and is included in the rent, rather than the utility bill. My stove and oven burn natural gas. My air conditioning is "open the windows and hope it's not 95F outside".
I could totally see someone who had to do electric heating and cooling having a far larger bill than I do (especially if they're living in a place that's large than a shoebox).
Even yours is weird. I don't have a desktop computer running but we cook or bake with electricity every other day. I do realize we spend a lot less than other people, every time I check the prices and estimates if I want to switch the companies estimate 2500kwh for two people. So there's that.
Weird. Looking at my past several bills, my monthly usage is fairly constant; ~450kWh per month. So, (if my math is correct) that puts my annual usage at ~5400kWh.
> I can't see it, even with heating, as it's California.
I've no idea where OP is, but there are inland parts of the state that get dangerously hot in the summer. Cooling could be a big concern. Plus, rental housing in the state is often poorly maintained, so all that lovely conditioned air could very well be leaking out all over the damn place.
That’s really quite a lot if you don’t have electric heating and cooling. It’d be worth trying to figure out where it’s going.
Every couple of years I look around a bit for something suitable, but have been unable to find anything that fits the bill, looks like it's not totally garbage, and isn't priced in the neighborhood of lab-grade measurement equipment.
Or some kind of production / workshop / datacentre / business usage.
https://www.washingtonpost.com/business/2019/11/11/pge-helpe...
https://www.sacbee.com/article251851903.html
Why would any of California's uniparty establishment want to refund all that money to random utility customers – who might not even be reliable party footsoldiers?
PG&E's lowest overnight rates are 30¢/kwh, surging during peak hours to rates ranging from 39¢/kwh to 72¢/kwh.
In neighboring Nevada, the utility serving its major metros NV Energy has rates of 11¢/kwh for residential users & 7-9¢/kwh for small businesses.
$700,000 over 20 years is $35,000 per year (not to mention Newsom wasn’t governor for most of that time)
PG&E revenues are $25,000,000,000 per year.
Regardless of what you think about the arrangement, it’s not why rates are high.
> In neighboring Nevada, the utility serving its major metros NV Energy has rates of 11¢/kwh for residential users & 7-9¢/kwh for small businesses
Comparing electricity costs across difference states rarely indicates much. Geographies, energy sources, and regulations are very different from state to state.
It's the tens of millions in political contributions to not just Newsom at every stage if his career but also his allies & ilk.
Plus tens of millions more in donations to favored "charitable" projects of family & cronies of politicians like Newsom & his allies.
Plus harder-to-tally overpriced jobs & contracts steered to the "right" (regime-aligned) consultants, firms, & unions. (Did you notice how the glowing character reference in the Wapo article, about how immune to influence Newsom is, comes from a former Newsom advisor – & member of his wife's nonprofit board – who currently has PG&E as a paying client of his PR firm?)
All the cash & favors are then topped off with a showy cheerfulness to "accept the responsibility" of extra costs from those state-idiosyncratic "regulations" you mention.
But of course that's the quid pro quo of their monopoly remaining unchallenged, & all costs more-than-passed-on to ratepayers – so the ruling machine including Newsom can keep getting their beaks wet in all PG&E's spending & donation fountains.
To look at only the formal campaign contributions against revenues, & accept as excuse a cover-story for extra corrupt expenditures ("regulations are very different"), & then conclude "no problem" is exactly why milking ratepayers this way, spreading the loot widely, is such a enduringly great racket.