Just a few years younger than you are. I can relate. I guess people could accuse us of being nostalgic for a time that never really existed, and maybe to some extent that's true, but on the other hand I do genuinely think that we've gone off into a very bad timeline. Just compare Jimmy Carter to Donald Trump, for example. Like what the hell happened?
Everyone thinks the Tesla vandalism is hurting Elon Musk, but it is the insurance companies that will pay. And I am certain that auto insurance rates will be increasing substantially for everyone in the very near future.
Muni utilities get treated with kid's gloves by courts though. I have direct personal experience of a muni burning nearly a quarter million acres, destroying over 500 homes and ~100K acres of timber. When it came to trial, the court capped their liability at $50m on day one. Their employees even joked about what an outrageous fire hazard all their lines were over text just a few days before it happened.
The funniest part is the utility increased rates...but only for people living in the fire-affected areas.
No? Privately owned utilities with guaranteed return rates will charge more to guarantee those return rates. A publicly owned utility would be fine operating at 0% returns.
A public utility has little incentive to be efficient as like you said, they are fine with 0% returns.
If a private utility gets a rate of $1.00 on $0.94 of expenses, it has an incentive to further reduce costs to increase the return, which reduces future rate growth (as higher rates won’t be approved).
Studies show the opposite is true. Nobody gets voted out of the municipal rate board for denying rate approvals and allowing maintenance and capital investment to fall by the wayside. It's one reason U.S. infrastructure is in such terrible shape.
CPUC members in California aren’t voted in, they are nominated by the Governor.
So CA is a unique situation where the regulator effectively controls the public utility so calling it “private” is a bit of a stretch. More like a state controlled entity that trades on the stock market.
If you’re talking about California utilities the rate decisions are all on the CPUC website.
Rate increases absolutely aren’t rubber stamped, the CPUC routinely denies expenditures and the comedians rate increases.
But speaking more of the hypothetical, if set up correctly a regulated private utility could be incentivized to reduce costs to capture a higher profit at the same rate.
Investor owned utilities have more access to capital. The credit union / non-profit / co-op / municipal alternative is not an automatic win for customers.
Where do you think a rinky-dink municipality gets the money to pay for infrastructure? They turn to capital markets, who will make a profit on the bonds or whatever.
They also don't build transformers in-house; they pay vendors for providing goods and services. Why do you think capital is any different from other services? If a private utility issues a bond, investors in the bond will also make a profit on the bond in addition to investors in the private utility making a profit on the utility.
Where does an investor owned utility get the money to pay for infrastructure? Because they're generally not cutting into profits to fund infrastructure improvements.
PG&E is paying 2.4 billion dollars a year in interest expense (at least in 2023), so it's fair to wonder if that's really any better.
