> Generation is very competitive It isn't. Its a fiction they sell to naive public. > These price of energy sent to customers is controlled by regulators Regul

> Generation is very competitive It isn't. Its a fiction they sell to naive public. > These price of energy sent to customers is controlled by regulators Regulators approve what the utilities want. Which is increased costs, more profits. They have no incentive to reduce OpEx -- it is pass through. There is no competition to compare alternatives. Both CapEx (increases profits) and OpEx (pass through) keep going up because of perverse incentives. > “Increasing cost” means investing in the grid. For example, to avoid your catastrophic forest fires in CA. They don't invest in maintenance. They are allowed to profit off of capex, not maintenance expenses. Most utilities operate with perverse incentives to increase profits by building more expensive systems than necessary (known as “gold plating”) and by prioritizing capital expenditures like new gas-fired power plants over operating expenses like energy efficiency or demand-side resources (called “capex bias”): https://rmi.org/for-ratepayers-to-realize-savings-from-clean-energy-utility-business-models-need-an-update/ https://rmi.org/for-ratepayers-to-realize-savings-from-clean... The perverse incentive rewards utilities with a profit margin for making capital investments, but not for contracted services that might serve customers better: https://www.utilitydive.com/news/tackling-the-perverse-incentive-utilities-need-new-cost-recovery-mechanism/518320 https://www.utilitydive.com/news/tackling-the-perverse-incen... "But all utility spending isn’t the same: there are two types of expenses for utilities, and they are treated differently. The first is operating expenses: costs for the day-to-day operation of business, which includes things like workers’ salaries, paper to print bills and stamps to mail them, and rent for offices. The second is capital expenses: the physical infrastructure that makes up the electric grid, including things like wires, poles, transformers, and substations. Utilities can collect their spending on operating expenses from you and me, on our bills. In practice, they almost always cover their costs, but they don’t get anything extra beyond what they spent. So, if a utility spends $100 on operating expenses, it collects $100 back, spread out across all the bills people pay to that utility. They don’t profit. But with capital expenses—that is, physical infrastructure, like poles and wires—utilities can collect the money they invested plus an additional percentage they keep as profit. So, if a utility spends $100 on capital expenses, they might collect $110 on our bills, with $100 paying for the wires and poles and $10 going towards profits." https://www.nrdc.org/bio/jc-kibbey/utility-accountability-101-how-do-utilities-make-money https://www.nrdc.org/bio/jc-kibbey/utility-accountability-10... From: Electricity Regulation In the US: A Guide https://www.utilitydive.com/news/inside-the-new-guidebook-for-electric-utility-regulation/426597/ https://www.utilitydive.com/news/inside-the-new-guidebook-fo... Cost-plus regulation was adopted as an effective way to regulate monopoly utilities. That is, by allowing only prudently incurred costs associated with used and useful investments and expenses, the regulator addresses the revenue requirement to arrive at just and reasonable rates. Because there was, by definition, no competitive service provider against which to benchmark prices, price control regulation was not appropriate. And competition itself was seen as inefficient because it would lead to unnecessary duplication of infrastructure. In addition to high investment levels, traditional utility regulation may also encourage excessive operating expenses, because its cost-plus structure means that all approved costs will be passed through to consumers. Although commissions do review operating expenses to determine if they are reasonable before approving them, they may not have the staff adequate for them to really examine them in detail in every rate case. Also, the higher the operating expenses were in the test year, the more the company is allowed to earn in the year after the rate case is resolved, so there is an incentive to “load up” expenses in any year expected to serve as a basis for a future rate case. Incentives to Improve Electric Utility Performance, its a 1985 paper,hard to copy paste from it: https://www.rand.org/content/dam/rand/pubs/reports/2007/R3245.pdf https://www.rand.org/content/dam/rand/pubs/reports/2007/R324...