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It's all quasi-privately run in the US. They aren't expected to compete because like said it isn't natural. But governments are generally incompetent at buildin

It's all quasi-privately run in the US. They aren't expected to compete because like said it isn't natural. But governments are generally incompetent at building and maintaining power grids. In the past, investment was been encouraged by allowing these companies a set rate of return on capital investments, but allow no profit on expenses. Thus, the energy company would get 10% return on any investment. This actually lead to over-investment in infrastructure--called gold plating. You need a new power tower? Build it as expensively as possible, with all the bells and whistles. Now, there are newer forms of price regulation designed to eliminate gold plating. >The incentive of a private owner will always be to sit on the network and collect rents and spend as little on maintenance and infrastructural investment as possible. Governments have exactly the same incentives. And the results are clear. US public infrastructure is fucking terrible. Puerto Rico is one example of public energy company. Didn't do so hot.

crdoconnor 9y ago
>governments are generally incompetent at building and maintaining power grids. When you strip out the market discipline imposed by competition, governments are usually more efficient than equivalent private sector operations. Privately run monopolies are - similar to governments - only kept in check by democratic accountability. The difference with a privately run regulated monopoly is that that democratic accountability is one step removed. As you said, it's quasi private - because the system would collapse under the weight of unchecked rent seeking behavior if it weren't heavily regulated. >Governments have exactly the same incentives. Believing that elections and power seeking does not motivate government decision makers is an odd opinion.
- rhino369 9y ago
  >Believing that elections and power seeking does not motivate government decision makers is an odd opinion. Only if the people want better infrastructure. They do not. People want lower prices, which means less investment.
  - crdoconnor 9y ago
    >Only if the people want better infrastructure. They do not. Another very, very odd opinion.
tonyarkles 9y ago
Two separate thoughts: > In the past, investment was been encouraged by allowing these companies a set rate of return on capital investments I've worked on so-called "cost plus" government contracts before, and the results were astoundingly bad. As a curiosity, what's your take on "cost plus", but with the "plus" being fixed profit on the initial bid instead of on the final invoice. The contractor will still be made whole on all of their costs, but there's a reasonable incentive against prolonging the contract indefinitely (i.e. the fixed margin) > Puerto Rico is one example of public energy company. Didn't do so hot. To the north, Saskatchewan has a 100% government-owned power company (SaskPower), and the result is generally quite positive. We have a land mass of 251ksqmi (approximately Texas) but only around 1.1M people. Agriculture makes up a significant chunk of our economy, and one of the big picture benefits of SaskPower is that urban and rural rates are approximately the same, even though the marginal cost of adding a new rural customer is waaaaay bigger than that of an urban customer. Our rates (once factoring for currency conversion) are pretty similar to Texas ($0.11USD/kWh here vs $0.08-0.09 there).

crdoconnor 9y ago

>governments are generally incompetent at building and maintaining power grids. When you strip out the market discipline imposed by competition, governments are usually more efficient than equivalent private sector operations. Privately run monopolies are - similar to governments - only kept in check by democratic accountability. The difference with a privately run regulated monopoly is that that democratic accountability is one step removed. As you said, it's quasi private - because the system would collapse under the weight of unchecked rent seeking behavior if it weren't heavily regulated. >Governments have exactly the same incentives. Believing that elections and power seeking does not motivate government decision makers is an odd opinion.

rhino369 9y ago
>Believing that elections and power seeking does not motivate government decision makers is an odd opinion. Only if the people want better infrastructure. They do not. People want lower prices, which means less investment.
- crdoconnor 9y ago
  >Only if the people want better infrastructure. They do not. Another very, very odd opinion.

tonyarkles 9y ago

Two separate thoughts: > In the past, investment was been encouraged by allowing these companies a set rate of return on capital investments I've worked on so-called "cost plus" government contracts before, and the results were astoundingly bad. As a curiosity, what's your take on "cost plus", but with the "plus" being fixed profit on the initial bid instead of on the final invoice. The contractor will still be made whole on all of their costs, but there's a reasonable incentive against prolonging the contract indefinitely (i.e. the fixed margin) > Puerto Rico is one example of public energy company. Didn't do so hot. To the north, Saskatchewan has a 100% government-owned power company (SaskPower), and the result is generally quite positive. We have a land mass of 251ksqmi (approximately Texas) but only around 1.1M people. Agriculture makes up a significant chunk of our economy, and one of the big picture benefits of SaskPower is that urban and rural rates are approximately the same, even though the marginal cost of adding a new rural customer is waaaaay bigger than that of an urban customer. Our rates (once factoring for currency conversion) are pretty similar to Texas ($0.11USD/kWh here vs $0.08-0.09 there).