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When it comes to things like utilities every penny of profit comes at the expense of the public. Either prices are raised so that a small number of people can s

When it comes to things like utilities every penny of profit comes at the expense of the public. Either prices are raised so that a small number of people can stuff their pockets with extra cash above what it costs to deliver the service and maintain the system or they get that extra money by failing to deliver the service or they do it by failing to maintain the system itself. I think the neglect and failure to invest in infrastructure is the worst because unlike high bills or increasing numbers of people not being served it's more or less invisible to the public while companies and shareholders rake in a lot of money, but doing that causes problems tax payers end up footing the bill for down the road, and it may not always be obvious to the public what the cause was. A power company who makes profit by neglecting the condition of their power lines can cause a wild fire, but it takes a lot of time, taxpayer money, and luck to identify that the lines were the source of the fire, to discover that the company knew (or should have known) about the problem and done something about it, to get enough proof of those things that a lawsuit is possible, and to fight it out in court in order to hold the company accountable. It's not just the cost of fire the public is on the hook for in that case, but the costs of everything else too.

krona 1y ago
> I think the neglect and failure to invest in infrastructure is the worst Cumulative capital investment by water companies in England and Wales since privatisation: £250bn. The infrastructure they inherited was never designed for the things it's being asked to do today, and it has a life expectancy. It would literally cost trillions to upgrade the entire sewerage system. This isn't apologia, it's just reality. The road network will also face the same fate since much of it was built >50 years ago and has a life expectancy of roughly 50 years. The country simply can't afford to replace it.
- another-dave 1y ago
  I mean, all the more reason it shouldn't be privatised. If it only makes sense to have one of something (road network, water system) it's a natural monopoly, _and_ it's going to require large public investment to be maintained, why wouldn't you in-house the expertise needed to do that and avoid the shareholder dividends overhead?
  - krona 1y ago
    My point is the differences you're postulating are a rounding error in the scale of the problem in front of you.
    - another-dave 1y ago
      > Taken together, the fall in shareholders' investment and retained earnings - or profit - and rising dividend payments mean that, according to the University of Greenwich, owners have withdrawn £85.2bn. > > — BBC (https://www.bbc.co.uk/news/articles/cw4478wnjdpo https://www.bbc.co.uk/news/articles/cw4478wnjdpo) It might be a rounding error vs the scale of investment needed for water, but that investment is needed regardless of public or private ownership. It's not a rounding error in terms of gov investment elsewhere — imagine an extra £85bn invested in, say, social housing? Even as a single one-off
  - lazide 1y ago
    Cynically, if you’re someone trying to make a lot of money, why wouldn’t you take a well run system, convince people they can save a bunch of money by ‘cutting waste’, then pocket as much money as you can by cutting long term maintenance and pocketing the difference - and when it blows up, sell them the solution at inflated prices too? It seems like the voters actively encouraged this kind of behavior. Eventually people figure it out (maybe) and go all fire and pitchforks - but that sounds like a problem for ‘future me’ eh? And if you’re good at structuring everything, maybe they’ll never even have anyone concrete to blame but themselves! (Classic referendum/politician behavior there)
    - mtrovo 1y ago
      I can't understand the perspective of those who defend privatizing natural monopolies. I'm not against privatization in any way, but good governance is impossible without consequences for failure. Focusing on Thames Water's particular example, if we assume malice as the cause, what would be the potential consequences? While the government could impose fines, the possibility of non-payment exists and what would happen in that case? Instead of debt collectors taking action, like ripping pipes from the ground or causing pension fund collapse, the government would act as a last resort investor, potentially providing further funding for a few additional years before the situation likely repeats.
- master_crab 1y ago
  And yet we are still in this position in the UK. Flip the question: What were the dividends paid out by the companies over the same time period? Assuming they gave out $100bn in dividend, then we wasted money that should have been spent on more infrastructure.
  - bethekidyouwant 1y ago
    This assumes a parity in government efficiency. A bit laughable innit?
    - juuular 1y ago
      That says more about the British people than it does about the ability of a government to be efficient.
- michaelt 1y ago
  The thing is, if a water company is in good financial health, with low debt and lots of money to invest in infrastructure, it’s completely legal for private equity to buy the company, stop investing in infrastructure, take out loans until a third of customer bills go on interest payments, and take the loaned money as ‘management fees’. Then dump untreated sewerage in rivers and demand more money from bill payers, because they “can’t afford” to maintain the infrastructure. In most industries a company so poorly managed would lose customers, go bankrupt, and be replaced by a better run company. But water companies? They have a monopoly, and everyone needs water to live.
  - krona 1y ago
    You're arguing a kind of strawman of unbridled economic liberalism which hasn't existed in England since probably the late 19th century, if at all.
    - ellen364 1y ago
      Based on "a third of customer bills go on interest payments", I'd guess the original comment was about Thames Water. In 2023 their interest payments were 28% of revenue. They also made the news for dumping particularly large volumes of sewage into rivers. https://www.theguardian.com/money/2023/dec/18/water-firms-use-up-to-28-percent-of-bill-payments-to-service-debt-in-areas-of-england https://www.theguardian.com/money/2023/dec/18/water-firms-us... https://www.bbc.co.uk/news/uk-england-london-67357566 https://www.bbc.co.uk/news/uk-england-london-67357566
      - krona 1y ago
        > they also made the news for dumping particularly large volumes of sewage into rivers Yes and they have been fined for doing so, thus proving my point. These companies have statutory obligations. See the Water Industry Act 1991 and subsequent legislation.
        tomrod 1y ago
        So sewage wasn't dumped, because the law prevented it? Or sewage was dumped, and it was against the law? I'm having a hard time reconciling the theoretical claims made in the thread with the blinding light of what actually happened.
- jdietrich 1y ago
  The regulator (Ofwat) also deserves a great deal of the blame. They determine the maximum prices that water companies can charge. Since the start of privatisation, they have prioritised low bills above all else and are proud of the fact that water bills fell by 45% in real terms between 1989 and 2020. The consequences are obvious - the supposed "efficiency" that pays for those lower bills inevitably means neglecting maintenance and reducing infrastructure investment. The short-term thinking that has led to this situation has been dictated by government, not shareholders. As mentioned elsewhere in the comments, the planning system is also a huge obstacle to infrastructure investment, with numerous important projects being blocked due to spurious environmental concerns. https://assets.publishing.service.gov.uk/media/687dfcc4312ee8a5f0806be6/Independent_Water_Commission_-_Final_Report_-_21_July.pdf https://assets.publishing.service.gov.uk/media/687dfcc4312ee...
  - lazide 1y ago
    A lot of this is (imo) a desire to keep juicing returns - often encouraged by things like pension funds, which happily look the other way. The economy always goes through these cycles - people find a way to scam/‘extract economic value’ from something no one is worried about at the time. They weren’t worried at the time, because it was well run and ‘what is the worst that can happen’. Over time, what was working well gets blown up as part of the resource extraction, leading to the thing being a giant expensive scandal now. The issue starts getting resolved - in the case of a public service often by necessary price increases because of stuff that wore out/deferred maintenance/disasters caused by the prior situation. If it’s a private company, bankruptcy. Eventually, even the dumbest of the population realizes the prior attitude was wrong and they got scammed. The thing starts maybe not being terrible for awhile. Scammers move onto another part of the economy as people are looking for them now. After a generation or so, people forget. Lather, rinse, repeat.
- mattmanser 1y ago
  That's according to the water companies though, you've taken those figures directly from water UK, an industry run company: https://www.water.org.uk/about-us/our-board https://www.water.org.uk/about-us/our-board We must look at the reality more critically. We already know that the investment is open to profit extraction, the companies doing the work are owned by the same investors and there's low oversight, they have occasionally been caught using inflated prices. We don't know the extent though as OFWAT has been criticized for only really catching the really obvious ones. All that investment is our own money, it's now apparent they've not taken on debt to pay for that investment. They claim they have, but it's now turned out that they've taken on that debt simply to pay for dividends to shareholders. Debt is around £60 billion, while share holder dividends over the years are about £80 billion (this figure varies depending on who you believe, but it's always higher than the debt). And that's without accounting for the inflated cost of "investment". And that debt is now apparently tax-payer guaranteed because it's all to people who are too big to fail. So they've basically made off with £20 billion in 35 years, plus however untold billions in profits from related companies in "investment", and we've got a water crisis developing, constant sewage discharge into rivers, etc.
- bluecheese452 1y ago
  These systems were built at a time when the country was much poorer. It can afford to replace it.
  - physicsguy 1y ago
    They were largely also built when planning wasn't a concern. Can you imagine the city of Birmingham being able to just buy land and building resevoirs in Wales and viaducting it all to the city today? https://en.wikipedia.org/wiki/Elan_Valley_Reservoirs https://en.wikipedia.org/wiki/Elan_Valley_Reservoirs
  - fredrikholm 1y ago
    Sweden's conservative government are pressuring building regulators to re-evaluate whether "all rooms require windows" in order to make the construction of apartments cheaper. "Perhaps a better plan would be to replaces cranes with horses and ropes such that we can once again afford windows" was my first thought when I read that in my turn of the century starter apartment with giant windows in every room. Like, GDP and productivity has tripled since that apartment was last renovated, let alone constructed. The idea that we can't afford a 20th century living standard anymore is nothing but absurdist propaganda.
    - hardlianotion 1y ago
      << Perhaps a better plan would be to replaces cranes with horses and ropes such that we can once again afford windows No - just bring back window taxes https://en.m.wikipedia.org/wiki/Window_tax https://en.m.wikipedia.org/wiki/Window_tax
    - kccqzy 1y ago
      That's a good thing to re-evaluate. The government shouldn't dictate people's preferences. People's lifestyles have changed. It's now normal for this generation of people to prefer a dark cave-like room where they play video games and socialize online. Glare from windows restrict where monitors could be placed. If they want natural light, they would prefer to go outside for a walk or a hike. And that's not to mention rooms like kitchens and bathrooms. Older houses invariably have windows for kitchens too since you need to open the windows to let out the fumes from gas cooking. And they would have windows in the bathroom to let out moisture. These days newer houses are already designed not to have windows in either kitchens or bathrooms.
- arichard123 1y ago
  But "investment" as the water companies define it is every penny not taken as profit. Staffing costs? Investment! Fixing leaks? Investment! So that figure sounds like money above and beyond, but I don't think it is.
- KoolKat23 1y ago
  So basically that £250bn is a bullshit figure, how long is a piece of string? It sounds big but it's meaningless.
- runako 1y ago
  > The infrastructure they inherited was never designed for the things it's being asked to do today I am not British, but this is confusing. Was private capital forced to take on the burden of privatizing the water system? Or did private investors err in their economic analysis? (Or did those investors just assume the problems would happen long after they personally had gotten paid?)
  - mr_toad 1y ago
    They’ve being paying out dividends and bonuses while running up debt and not investing in infrastructure. Some of these companies are already worthless on paper. Clearly they intend to make as much as possible and then walk away.
  - qcnguy 1y ago
    They placed a bet on the government allowing water prices to rise to match the level of investment needed, and lost that bet.
- anthonypasq 1y ago
  isnt the cost of not fixing it > trillions of dollars?
- FromOmelas 1y ago
  The 250bn figure is one pushed by the private owners, trying to defend their high yields. It's likely inflated with bonuses and short term schemes to juice returns. Meanwhile, they've extracted 85bn in dividends since privatization began. Privatizing them cost approx 7.6bn - that's a 12x return over less then 40 years. Pretty nice if you can get it.
- GJR 1y ago
  So where has the profit, paid as bonuses to executives and shareholders, come from? The UK water companies were paid extra to fix the infrastructure and the cash paid by the public has increased.
- pbhjpbhj 1y ago
  >Cumulative capital investment Now divide that by C-suite wages + monies paid as profits. Well the estimated industry profits of ~£20B pa over the last 30+ years would have got us some way to replacing the worst of the sewage system. Instead that money went to yachts and pushing up rental costs, or whatever.
- autoexec 1y ago
  If a country can't afford to maintain it's infrastructure it's a failed country. Very little in our world was designed to do what we need it do 50 years later. It's unlikely that anyone will even know what our needs 50 years from today will be. This is why the expectation is that systems we build will be constantly maintained, upgraded, modified, expanded, and redesigned as needed and with the next several decades in mind (to the best of our ability). It's what we've always done with all infrastructure and even our cities themselves. Neglecting things like sewer systems until they are overwhelmed, failing, and prohibitively expensive to fix isn't inevitable. It's just bad governance. It doesn't matter if it's private companies or governments, neglecting infrastructure so that a few people can line their own pockets until the situation becomes critical should be criminal, but at the very least nobody should accept them throwing their hands up and saying it's just too expensive to fix now.
mhh__ 1y ago
By definition every penny of profit always comes at someone's expense but I don't think we'd advocate for nationalising Tesco's?
- jemmyw 1y ago
  That's true, but supermarkets compete with one another on price and other factors. They are motivated to do things to get more customers. Yes, there are many cases where supermarkets have been bad actors, but that's solvable with competition regulation. Water service is very different, and the current setup in the UK seems pretty insane - you can't have competition on who supplies water to your house. People aren't going to move location because of the quality of the water supply until things get very bad. They are motivated to spend as little as possible. You can set up a system where companies are involved in the delivery of water in a way that let's them compete. For example, national entity owns the pipes and needs to provide a given service, companies compete for pipe maintenance, IT services, etc. It's hardly difficult to think up a system that is mostly free market and better in every way than what the people from the UK have to suffer through.
  - e4325f 1y ago
    Railways are another example of competition not being possible and where privatisation makes no sense.
    - bluGill 1y ago
      Competition is possible, it just is rarely worth it. NYC subways worked fairly well as a competitive system until the city started passing maximum price laws (which in turn meant they couldn't maintain the system and eventually the city took it over). However the competition meant redundant service to the dense areas as each built there, at the expense of less dense areas that should have got service. It also meant that where lines did cross each other (a complex task even in 3d) they generally didn't built transfers even though a single system would have. The claim competition is not possible is therefor false. We can debate if we want it, but it is incorrect to claim it cannot work.
WillAdams 1y ago
Powerful argument for such to be operated as co-operatives if ownership by a non-government entity is called for.
patanegra 1y ago
My provider of water is Thames Water. In the past 10 years, they did cumulative turnover £18,107 turnover, and profit -£1,180. So they in fact operate with a negative margin -6.52%. In the UK, owning a utility company is nothing easy. Shareholders are definitely not stuffing their pockets. The biggest owner is Ontario pension fund (32%). I guess, poor retired Canadians are not very happy about this investment. So I would say, your framing sounds interesting, until one digs deeper into facts.
- joncrocks 1y ago
  I think that this might be some useful context. https://www.theguardian.com/business/2023/jun/30/in-charts-how-privatisation-drained-thames-waters-coffers https://www.theguardian.com/business/2023/jun/30/in-charts-h... Overall the debt held by the company has ballooned since the 90s, meanwhile large dividend payments went out to shareholders. This appears to be extraction of value out of Thames Water (TW). It's hard to see those graphs and then take TW seriously when they complain they need money for investment.
xp84 1y ago
I agree with you in my heart, but I'm worried we both could be overlooking something important, so let me steel-man an argument against: You said correctly that the private utility monopolist can choose from the menu of raising prices, delivering a subpar (cheaper) service for the same price, or can "defer" (aka skip) maintenance indefinitely. All ways they can extract cash to pay shareholders or even worse, pay management fees to private equity. But the government-owned utility that we idealize, which provides the reasonable service at a breakeven price, may not be realistic. Government has its own incentives: Some politicians want to take funding from your utility to pay for their pet project. Others (political operatives or even civil servants) may sneak in a corrupt overpriced contract to benefit their corrupt associates. Public unions are known for negotiating unreasonable work rules and contracts that preserve jobs that are not actually needed. All of the above together create a drain on finances of a government-owned utility, which is the public counterpart of the drain on finances that "the need to make a profit for the owners" places on investor-owned utilities. I hate my local investor-owned utilities with a fiery passion and can't believe most governments could do worse, but I think we shouldn't overlook how easy it is for nationalized entities to engage in similar amounts of shenanigans.
BrtByte 1y ago
What's worse is how hard it is to create political urgency around invisible decay
supportengineer 1y ago
>> When it comes to things like utilities every penny of profit comes at the expense of the public I too am a customer of PG&E.
legulere 1y ago
Utilities are very capital-intensive and lining money incurs interest. If you let the state run utilities you will also pay profits in the form of the interest for bonds. The government pays lower rates, but there’s a strong push to keep government debts down while private debts are mostly ignored.

krona 1y ago

> I think the neglect and failure to invest in infrastructure is the worst Cumulative capital investment by water companies in England and Wales since privatisation: £250bn. The infrastructure they inherited was never designed for the things it's being asked to do today, and it has a life expectancy. It would literally cost trillions to upgrade the entire sewerage system. This isn't apologia, it's just reality. The road network will also face the same fate since much of it was built >50 years ago and has a life expectancy of roughly 50 years. The country simply can't afford to replace it.

another-dave 1y ago
I mean, all the more reason it shouldn't be privatised. If it only makes sense to have one of something (road network, water system) it's a natural monopoly, _and_ it's going to require large public investment to be maintained, why wouldn't you in-house the expertise needed to do that and avoid the shareholder dividends overhead?
- krona 1y ago
  My point is the differences you're postulating are a rounding error in the scale of the problem in front of you.
  - another-dave 1y ago
    > Taken together, the fall in shareholders' investment and retained earnings - or profit - and rising dividend payments mean that, according to the University of Greenwich, owners have withdrawn £85.2bn. > > — BBC (https://www.bbc.co.uk/news/articles/cw4478wnjdpo https://www.bbc.co.uk/news/articles/cw4478wnjdpo) It might be a rounding error vs the scale of investment needed for water, but that investment is needed regardless of public or private ownership. It's not a rounding error in terms of gov investment elsewhere — imagine an extra £85bn invested in, say, social housing? Even as a single one-off
- lazide 1y ago
  Cynically, if you’re someone trying to make a lot of money, why wouldn’t you take a well run system, convince people they can save a bunch of money by ‘cutting waste’, then pocket as much money as you can by cutting long term maintenance and pocketing the difference - and when it blows up, sell them the solution at inflated prices too? It seems like the voters actively encouraged this kind of behavior. Eventually people figure it out (maybe) and go all fire and pitchforks - but that sounds like a problem for ‘future me’ eh? And if you’re good at structuring everything, maybe they’ll never even have anyone concrete to blame but themselves! (Classic referendum/politician behavior there)
  - mtrovo 1y ago
    I can't understand the perspective of those who defend privatizing natural monopolies. I'm not against privatization in any way, but good governance is impossible without consequences for failure. Focusing on Thames Water's particular example, if we assume malice as the cause, what would be the potential consequences? While the government could impose fines, the possibility of non-payment exists and what would happen in that case? Instead of debt collectors taking action, like ripping pipes from the ground or causing pension fund collapse, the government would act as a last resort investor, potentially providing further funding for a few additional years before the situation likely repeats.
master_crab 1y ago
And yet we are still in this position in the UK. Flip the question: What were the dividends paid out by the companies over the same time period? Assuming they gave out $100bn in dividend, then we wasted money that should have been spent on more infrastructure.
- bethekidyouwant 1y ago
  This assumes a parity in government efficiency. A bit laughable innit?
  - juuular 1y ago
    That says more about the British people than it does about the ability of a government to be efficient.
michaelt 1y ago
The thing is, if a water company is in good financial health, with low debt and lots of money to invest in infrastructure, it’s completely legal for private equity to buy the company, stop investing in infrastructure, take out loans until a third of customer bills go on interest payments, and take the loaned money as ‘management fees’. Then dump untreated sewerage in rivers and demand more money from bill payers, because they “can’t afford” to maintain the infrastructure. In most industries a company so poorly managed would lose customers, go bankrupt, and be replaced by a better run company. But water companies? They have a monopoly, and everyone needs water to live.
- krona 1y ago
  You're arguing a kind of strawman of unbridled economic liberalism which hasn't existed in England since probably the late 19th century, if at all.
  - ellen364 1y ago
    Based on "a third of customer bills go on interest payments", I'd guess the original comment was about Thames Water. In 2023 their interest payments were 28% of revenue. They also made the news for dumping particularly large volumes of sewage into rivers. https://www.theguardian.com/money/2023/dec/18/water-firms-use-up-to-28-percent-of-bill-payments-to-service-debt-in-areas-of-england https://www.theguardian.com/money/2023/dec/18/water-firms-us... https://www.bbc.co.uk/news/uk-england-london-67357566 https://www.bbc.co.uk/news/uk-england-london-67357566
    - krona 1y ago
      > they also made the news for dumping particularly large volumes of sewage into rivers Yes and they have been fined for doing so, thus proving my point. These companies have statutory obligations. See the Water Industry Act 1991 and subsequent legislation.
      - tomrod 1y ago
        So sewage wasn't dumped, because the law prevented it? Or sewage was dumped, and it was against the law? I'm having a hard time reconciling the theoretical claims made in the thread with the blinding light of what actually happened.
jdietrich 1y ago
The regulator (Ofwat) also deserves a great deal of the blame. They determine the maximum prices that water companies can charge. Since the start of privatisation, they have prioritised low bills above all else and are proud of the fact that water bills fell by 45% in real terms between 1989 and 2020. The consequences are obvious - the supposed "efficiency" that pays for those lower bills inevitably means neglecting maintenance and reducing infrastructure investment. The short-term thinking that has led to this situation has been dictated by government, not shareholders. As mentioned elsewhere in the comments, the planning system is also a huge obstacle to infrastructure investment, with numerous important projects being blocked due to spurious environmental concerns. https://assets.publishing.service.gov.uk/media/687dfcc4312ee8a5f0806be6/Independent_Water_Commission_-_Final_Report_-_21_July.pdf https://assets.publishing.service.gov.uk/media/687dfcc4312ee...
- lazide 1y ago
  A lot of this is (imo) a desire to keep juicing returns - often encouraged by things like pension funds, which happily look the other way. The economy always goes through these cycles - people find a way to scam/‘extract economic value’ from something no one is worried about at the time. They weren’t worried at the time, because it was well run and ‘what is the worst that can happen’. Over time, what was working well gets blown up as part of the resource extraction, leading to the thing being a giant expensive scandal now. The issue starts getting resolved - in the case of a public service often by necessary price increases because of stuff that wore out/deferred maintenance/disasters caused by the prior situation. If it’s a private company, bankruptcy. Eventually, even the dumbest of the population realizes the prior attitude was wrong and they got scammed. The thing starts maybe not being terrible for awhile. Scammers move onto another part of the economy as people are looking for them now. After a generation or so, people forget. Lather, rinse, repeat.
mattmanser 1y ago
That's according to the water companies though, you've taken those figures directly from water UK, an industry run company: https://www.water.org.uk/about-us/our-board https://www.water.org.uk/about-us/our-board We must look at the reality more critically. We already know that the investment is open to profit extraction, the companies doing the work are owned by the same investors and there's low oversight, they have occasionally been caught using inflated prices. We don't know the extent though as OFWAT has been criticized for only really catching the really obvious ones. All that investment is our own money, it's now apparent they've not taken on debt to pay for that investment. They claim they have, but it's now turned out that they've taken on that debt simply to pay for dividends to shareholders. Debt is around £60 billion, while share holder dividends over the years are about £80 billion (this figure varies depending on who you believe, but it's always higher than the debt). And that's without accounting for the inflated cost of "investment". And that debt is now apparently tax-payer guaranteed because it's all to people who are too big to fail. So they've basically made off with £20 billion in 35 years, plus however untold billions in profits from related companies in "investment", and we've got a water crisis developing, constant sewage discharge into rivers, etc.
bluecheese452 1y ago
These systems were built at a time when the country was much poorer. It can afford to replace it.
- physicsguy 1y ago
  They were largely also built when planning wasn't a concern. Can you imagine the city of Birmingham being able to just buy land and building resevoirs in Wales and viaducting it all to the city today? https://en.wikipedia.org/wiki/Elan_Valley_Reservoirs https://en.wikipedia.org/wiki/Elan_Valley_Reservoirs
- fredrikholm 1y ago
  Sweden's conservative government are pressuring building regulators to re-evaluate whether "all rooms require windows" in order to make the construction of apartments cheaper. "Perhaps a better plan would be to replaces cranes with horses and ropes such that we can once again afford windows" was my first thought when I read that in my turn of the century starter apartment with giant windows in every room. Like, GDP and productivity has tripled since that apartment was last renovated, let alone constructed. The idea that we can't afford a 20th century living standard anymore is nothing but absurdist propaganda.
  - hardlianotion 1y ago
    << Perhaps a better plan would be to replaces cranes with horses and ropes such that we can once again afford windows No - just bring back window taxes https://en.m.wikipedia.org/wiki/Window_tax https://en.m.wikipedia.org/wiki/Window_tax
  - kccqzy 1y ago
    That's a good thing to re-evaluate. The government shouldn't dictate people's preferences. People's lifestyles have changed. It's now normal for this generation of people to prefer a dark cave-like room where they play video games and socialize online. Glare from windows restrict where monitors could be placed. If they want natural light, they would prefer to go outside for a walk or a hike. And that's not to mention rooms like kitchens and bathrooms. Older houses invariably have windows for kitchens too since you need to open the windows to let out the fumes from gas cooking. And they would have windows in the bathroom to let out moisture. These days newer houses are already designed not to have windows in either kitchens or bathrooms.
arichard123 1y ago
But "investment" as the water companies define it is every penny not taken as profit. Staffing costs? Investment! Fixing leaks? Investment! So that figure sounds like money above and beyond, but I don't think it is.
KoolKat23 1y ago
So basically that £250bn is a bullshit figure, how long is a piece of string? It sounds big but it's meaningless.
runako 1y ago
> The infrastructure they inherited was never designed for the things it's being asked to do today I am not British, but this is confusing. Was private capital forced to take on the burden of privatizing the water system? Or did private investors err in their economic analysis? (Or did those investors just assume the problems would happen long after they personally had gotten paid?)
- mr_toad 1y ago
  They’ve being paying out dividends and bonuses while running up debt and not investing in infrastructure. Some of these companies are already worthless on paper. Clearly they intend to make as much as possible and then walk away.
- qcnguy 1y ago
  They placed a bet on the government allowing water prices to rise to match the level of investment needed, and lost that bet.
anthonypasq 1y ago
isnt the cost of not fixing it > trillions of dollars?
FromOmelas 1y ago
The 250bn figure is one pushed by the private owners, trying to defend their high yields. It's likely inflated with bonuses and short term schemes to juice returns. Meanwhile, they've extracted 85bn in dividends since privatization began. Privatizing them cost approx 7.6bn - that's a 12x return over less then 40 years. Pretty nice if you can get it.
GJR 1y ago
So where has the profit, paid as bonuses to executives and shareholders, come from? The UK water companies were paid extra to fix the infrastructure and the cash paid by the public has increased.
pbhjpbhj 1y ago
>Cumulative capital investment Now divide that by C-suite wages + monies paid as profits. Well the estimated industry profits of ~£20B pa over the last 30+ years would have got us some way to replacing the worst of the sewage system. Instead that money went to yachts and pushing up rental costs, or whatever.
autoexec 1y ago
If a country can't afford to maintain it's infrastructure it's a failed country. Very little in our world was designed to do what we need it do 50 years later. It's unlikely that anyone will even know what our needs 50 years from today will be. This is why the expectation is that systems we build will be constantly maintained, upgraded, modified, expanded, and redesigned as needed and with the next several decades in mind (to the best of our ability). It's what we've always done with all infrastructure and even our cities themselves. Neglecting things like sewer systems until they are overwhelmed, failing, and prohibitively expensive to fix isn't inevitable. It's just bad governance. It doesn't matter if it's private companies or governments, neglecting infrastructure so that a few people can line their own pockets until the situation becomes critical should be criminal, but at the very least nobody should accept them throwing their hands up and saying it's just too expensive to fix now.

mhh__ 1y ago

By definition every penny of profit always comes at someone's expense but I don't think we'd advocate for nationalising Tesco's?

jemmyw 1y ago
That's true, but supermarkets compete with one another on price and other factors. They are motivated to do things to get more customers. Yes, there are many cases where supermarkets have been bad actors, but that's solvable with competition regulation. Water service is very different, and the current setup in the UK seems pretty insane - you can't have competition on who supplies water to your house. People aren't going to move location because of the quality of the water supply until things get very bad. They are motivated to spend as little as possible. You can set up a system where companies are involved in the delivery of water in a way that let's them compete. For example, national entity owns the pipes and needs to provide a given service, companies compete for pipe maintenance, IT services, etc. It's hardly difficult to think up a system that is mostly free market and better in every way than what the people from the UK have to suffer through.
- e4325f 1y ago
  Railways are another example of competition not being possible and where privatisation makes no sense.
  - bluGill 1y ago
    Competition is possible, it just is rarely worth it. NYC subways worked fairly well as a competitive system until the city started passing maximum price laws (which in turn meant they couldn't maintain the system and eventually the city took it over). However the competition meant redundant service to the dense areas as each built there, at the expense of less dense areas that should have got service. It also meant that where lines did cross each other (a complex task even in 3d) they generally didn't built transfers even though a single system would have. The claim competition is not possible is therefor false. We can debate if we want it, but it is incorrect to claim it cannot work.

WillAdams 1y ago

Powerful argument for such to be operated as co-operatives if ownership by a non-government entity is called for.

patanegra 1y ago

My provider of water is Thames Water. In the past 10 years, they did cumulative turnover £18,107 turnover, and profit -£1,180. So they in fact operate with a negative margin -6.52%. In the UK, owning a utility company is nothing easy. Shareholders are definitely not stuffing their pockets. The biggest owner is Ontario pension fund (32%). I guess, poor retired Canadians are not very happy about this investment. So I would say, your framing sounds interesting, until one digs deeper into facts.

joncrocks 1y ago
I think that this might be some useful context. https://www.theguardian.com/business/2023/jun/30/in-charts-how-privatisation-drained-thames-waters-coffers https://www.theguardian.com/business/2023/jun/30/in-charts-h... Overall the debt held by the company has ballooned since the 90s, meanwhile large dividend payments went out to shareholders. This appears to be extraction of value out of Thames Water (TW). It's hard to see those graphs and then take TW seriously when they complain they need money for investment.

xp84 1y ago

I agree with you in my heart, but I'm worried we both could be overlooking something important, so let me steel-man an argument against: You said correctly that the private utility monopolist can choose from the menu of raising prices, delivering a subpar (cheaper) service for the same price, or can "defer" (aka skip) maintenance indefinitely. All ways they can extract cash to pay shareholders or even worse, pay management fees to private equity. But the government-owned utility that we idealize, which provides the reasonable service at a breakeven price, may not be realistic. Government has its own incentives: Some politicians want to take funding from your utility to pay for their pet project. Others (political operatives or even civil servants) may sneak in a corrupt overpriced contract to benefit their corrupt associates. Public unions are known for negotiating unreasonable work rules and contracts that preserve jobs that are not actually needed. All of the above together create a drain on finances of a government-owned utility, which is the public counterpart of the drain on finances that "the need to make a profit for the owners" places on investor-owned utilities. I hate my local investor-owned utilities with a fiery passion and can't believe most governments could do worse, but I think we shouldn't overlook how easy it is for nationalized entities to engage in similar amounts of shenanigans.

BrtByte 1y ago

What's worse is how hard it is to create political urgency around invisible decay

supportengineer 1y ago

>> When it comes to things like utilities every penny of profit comes at the expense of the public I too am a customer of PG&E.

legulere 1y ago

Utilities are very capital-intensive and lining money incurs interest. If you let the state run utilities you will also pay profits in the form of the interest for bonds. The government pays lower rates, but there’s a strong push to keep government debts down while private debts are mostly ignored.