3 ms·

My country recently (2019) privatized the electricity supply. The infrastructure is owner and operated by a government entity, but the company you buy electrici

by fy20 3y ago

My country recently (2019) privatized the electricity supply. The infrastructure is owner and operated by a government entity, but the company you buy electricity from is a private entity, and you can choose which supplier you use. Generation was already privatized a long time ago. It was advertised as being able to offer lower prices to the consumer through competition, but all it has done is provided more ways for private companies to extract money from the general population. Previously electricity prices were overseen by the government, and I don't really understand how a private company could do that any cheaper. There was already a market for the spot price that electricity was sold at by producers, so all the entity you bought it from had to do was balance the books. Any excess would have been put towards the balance for the next period, but now it goes to the owners of the company.

avidphantasm 3y ago
> but all it has done is provided more ways for private companies to extract money from the general population. Then the system is operating as it was designed to. This is the coercive law of competition in action. And regulation won’t help in the end. Ultimately, without an overarching ideological project beyond capital accumulation, the motivation to accumulate wealth dissolves all social bonds that enforce trustworthiness, so regulation is doomed to fail due to bribery and petty corruption.
- XorNot 3y ago
  "Laws are sometimes broken therefore why even bother having laws?" We don't make murder legal because it still happens, and the existence of corruption doesn't make regulation a bad idea - it means we need to clamp down on corruption. White collar crime has good PR representation, and that needs to stop.
  - a1o 3y ago
    I think both of you are correct, but what this implies is a different system - we would need to put resources into figuring it out how this system would work.
Machado117 3y ago
Same thing happened in my country. Fortunately someone decided to create a cooperative and now I can avoid contributing to the profit margin of some private company
- flanked-evergl 3y ago
  I once worked for a co-operative, and it was by far the most poorly run company I have ever worked for or with. The control of the company was so far removed from shareholder control that the management was basically only accountable to their creditors (i.e. banks). The company had every corporate pathology you could imagine and then some. It was orders of magnitude worse than a Fortune 500 dinosaur I also worked for. The cooperative was performing poor profit-wise while middle management lined their pockets. If it was not a cooperative, their share price would have been in the gutter, and someone would have bought up enough shares for cheap to fire the leadership and replace it with people who are competent, and then benefited from the increasing share price of having the company ran competently.
  - LastTrain 3y ago
    So you shared your experience with one co-op, do you think they are inherently worse than other types of business organizations? If so, why?
    - flanked-evergl 3y ago
      I definitely don't think they are inherently better. I'm sure some of them are good, but the real problem I see, as I already pointed out, is that shareholders have less ability to hold management to account than in more traditional business structures.
      - LastTrain 3y ago
        How do I hold the the CEO of Cable One to account, let alone better than I can hold my electric co-op to account? On my co-op I have a voting share, can run for office, directly lobby other co-op members directly, etc etc.
gnfargbl 3y ago
In the UK, we have a similar system, and for a decent time it actually did deliver low energy prices for us. The way this worked was that a new energy provider could easily set up and offer low tariffs, backed by private investment and a gamble that long-term prices would stay low. Of course, when prices rose, that gamble failed... and who picked up the bill? Why, the taxpayer, of course! [1] The overall effect of this game was that more astute consumers, who tended to switch to the lower-cost providers, were ultimately subsidised by the less-astute consumers who stuck with the traditional players. Or to put it another way, the rich were subsidised by the poor. [1] https://www.bbc.co.uk/news/business-63805028 https://www.bbc.co.uk/news/business-63805028
- VBprogrammer 3y ago
  > Or to put it another way, the rich were subsidised by the poor. I agree with most of what you've said but I don't agree that this conclusion follows. If anything when I was less well off I was far more inclined to put up with the hassle of changing providers every few months to minimise the costs than I am now. I do think there were some efficiencies generated, it's just hard to figure out if a nationalised entity would have gotten there eventually. The online only account management for example probably saves a bunch over call centre staff and sending people around to read the meter.
sanderjd 3y ago
The way I would put this is that I would expect a system with competitive generators and retailers mediated by a well run "free" market to more accurately discover the "natural" price for electricity than a public committee unilaterally setting the prices. But those more efficiently discovered "natural" prices may be higher or lower than the prices previously chosen by the public committee. It's possible that the committee was setting artificially low prices subsidized by the public purse, and it's possible they were setting them higher than necessary. Either way, it could just be an accident - that they tried as hard and in as good faith as possible to pick the right prices, but just didn't have all the information or didn't model it exactly right - or it could be that they were responding to political pressure, choosing low subsidized prices because it's popular with voters, or choosing high prices because it's popular with lobbyists from utilities. Markets certainly come with their own trade offs, and they certainly don't do price discovery perfectly either, but where they do have the advantage (in my view) is in spreading out the information-gathering, modeling, and incentive-following responsibilities across all the market participants, rather than concentrating them in a public committee that is inevitably a small group. But this is really just the generic age-old argument between central planning and market structures. I tend to find market structures more appealing because I can contribute my ideas and my work into them as an employee or entrepreneur, whereas I'll almost certainly never be a central planner. But it's not a panacea by any means. There is a good reason we keep penduluming between more centrally planned solutions and more market based solutions in different areas; there are real trade offs between them and it's never obvious what the right balance is.

by fy20 3y ago

avidphantasm 3y ago

> but all it has done is provided more ways for private companies to extract money from the general population. Then the system is operating as it was designed to. This is the coercive law of competition in action. And regulation won’t help in the end. Ultimately, without an overarching ideological project beyond capital accumulation, the motivation to accumulate wealth dissolves all social bonds that enforce trustworthiness, so regulation is doomed to fail due to bribery and petty corruption.

XorNot 3y ago
"Laws are sometimes broken therefore why even bother having laws?" We don't make murder legal because it still happens, and the existence of corruption doesn't make regulation a bad idea - it means we need to clamp down on corruption. White collar crime has good PR representation, and that needs to stop.
- a1o 3y ago
  I think both of you are correct, but what this implies is a different system - we would need to put resources into figuring it out how this system would work.

Machado117 3y ago

Same thing happened in my country. Fortunately someone decided to create a cooperative and now I can avoid contributing to the profit margin of some private company

flanked-evergl 3y ago
I once worked for a co-operative, and it was by far the most poorly run company I have ever worked for or with. The control of the company was so far removed from shareholder control that the management was basically only accountable to their creditors (i.e. banks). The company had every corporate pathology you could imagine and then some. It was orders of magnitude worse than a Fortune 500 dinosaur I also worked for. The cooperative was performing poor profit-wise while middle management lined their pockets. If it was not a cooperative, their share price would have been in the gutter, and someone would have bought up enough shares for cheap to fire the leadership and replace it with people who are competent, and then benefited from the increasing share price of having the company ran competently.
- LastTrain 3y ago
  So you shared your experience with one co-op, do you think they are inherently worse than other types of business organizations? If so, why?
  - flanked-evergl 3y ago
    I definitely don't think they are inherently better. I'm sure some of them are good, but the real problem I see, as I already pointed out, is that shareholders have less ability to hold management to account than in more traditional business structures.
    - LastTrain 3y ago
      How do I hold the the CEO of Cable One to account, let alone better than I can hold my electric co-op to account? On my co-op I have a voting share, can run for office, directly lobby other co-op members directly, etc etc.

gnfargbl 3y ago

In the UK, we have a similar system, and for a decent time it actually did deliver low energy prices for us. The way this worked was that a new energy provider could easily set up and offer low tariffs, backed by private investment and a gamble that long-term prices would stay low. Of course, when prices rose, that gamble failed... and who picked up the bill? Why, the taxpayer, of course! [1] The overall effect of this game was that more astute consumers, who tended to switch to the lower-cost providers, were ultimately subsidised by the less-astute consumers who stuck with the traditional players. Or to put it another way, the rich were subsidised by the poor. [1] https://www.bbc.co.uk/news/business-63805028 https://www.bbc.co.uk/news/business-63805028

VBprogrammer 3y ago
> Or to put it another way, the rich were subsidised by the poor. I agree with most of what you've said but I don't agree that this conclusion follows. If anything when I was less well off I was far more inclined to put up with the hassle of changing providers every few months to minimise the costs than I am now. I do think there were some efficiencies generated, it's just hard to figure out if a nationalised entity would have gotten there eventually. The online only account management for example probably saves a bunch over call centre staff and sending people around to read the meter.

sanderjd 3y ago

The way I would put this is that I would expect a system with competitive generators and retailers mediated by a well run "free" market to more accurately discover the "natural" price for electricity than a public committee unilaterally setting the prices. But those more efficiently discovered "natural" prices may be higher or lower than the prices previously chosen by the public committee. It's possible that the committee was setting artificially low prices subsidized by the public purse, and it's possible they were setting them higher than necessary. Either way, it could just be an accident - that they tried as hard and in as good faith as possible to pick the right prices, but just didn't have all the information or didn't model it exactly right - or it could be that they were responding to political pressure, choosing low subsidized prices because it's popular with voters, or choosing high prices because it's popular with lobbyists from utilities. Markets certainly come with their own trade offs, and they certainly don't do price discovery perfectly either, but where they do have the advantage (in my view) is in spreading out the information-gathering, modeling, and incentive-following responsibilities across all the market participants, rather than concentrating them in a public committee that is inevitably a small group. But this is really just the generic age-old argument between central planning and market structures. I tend to find market structures more appealing because I can contribute my ideas and my work into them as an employee or entrepreneur, whereas I'll almost certainly never be a central planner. But it's not a panacea by any means. There is a good reason we keep penduluming between more centrally planned solutions and more market based solutions in different areas; there are real trade offs between them and it's never obvious what the right balance is.