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Cities can cost effectively start their own utilities

kevin.burke.dev

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Re: Cities can cost effectively start their own utilities

#71

Post by AnotherGoodName »

bitmasher9 wrote: post #50

This is absolutely a no-brainer for municipalities. The private companies are charging a premium that they return to shareholders and give to executives. Municipalities have excellent access to credit at rates significantly lower than the premium charged by utility companies. The residents get cheaper access and more influence in how the utility is ran. The number of people that pay for-profit companies for natural g…

Yep you literally get half price power if your city does it - https://www.cityofpaloalto.org/files/assets/public/v/5/utili...

I’m lucky enough to be in such an area. Note the city takes a bit of the above as profit too. Not that that’s a bad thing but it just goes to show how beneficial it is and how much more you’re paying by not doing it. Every city should do it asap.

Re: Cities can cost effectively start their own utilities

#72

Post by hypothesis »

jeffbee wrote: post #69
jncfhnb wrote: post #48

Earlier quoted context omitted.

No, their argument is sound. It’s just missing the point of utilities. They’re saying that the cost of providing electricity to the cities, where everything is densely located and there are fewer trees and fewer overhead lines needing under grounding is lower so they should charge less to city consumers. They imply that the bulk of the cost is delivering power to the richer consumers further out because there’s a lot…

Maybe, but it's also clear that rural electrification was a huge error. People should live in clusters of at least a handful of structures where it's practical and affordable to provision electric lines (and telecommunications), or they should be off the grid altogether. What we built in the 20th century was the worst possible thing: mile after mile of transmission and distribution equipment serving dispersed houses…

Eh, but we should not leave people without basics of civilization. Yes, it’s a subsidy, but benefits outweigh hoarding of wealth.

Re: Cities can cost effectively start their own utilities

#73

Post by Aurornis »

AnotherGoodName wrote: post #67
Aurornis wrote: post #46

The author estimates that electricity prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%. That’s a good hint that this hypothetical is missing some important details The article hedges against someone pointing this out by admitting that Walnut Creek is an unusually optimistic location and that PG&E is also recognizing large expenses related to ongoing infra…

Less than 20c per kWh for my local city power - https://www.cityofpaloalto.org/files/assets/public/v/5/utili... About half the price of PG&E. This is in an otherwise PG&E area. People should be demanding their city handle power. It leads to half the price.

> People should be demanding their city handle power. It leads to half the price.

My power is significantly cheaper than yours but it comes from a private company.

Picking random cities doesn’t tell us anything at all about costs or efficiency. Different areas have different costs and expenses.

You have to compare apples to apples.

Re: Cities can cost effectively start their own utilities

#74

Post by rangestransform »

rufus_foreman wrote: post #40
rangestransform wrote: post #3

Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free?

>> Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free I don't think so. Not currently. "nor shall private property be taken for public use, without just compensation" That's federal law. Supposedly, that applies to the states through the Fourteenth Amendment. All of the sudden, once the Fourteenth Amendment is passed, the Constitut…

It’s not unconstitutional to make utilities liable for fires that their power lines ignite, and it won’t be a taking without just compensation if the actual value of the company drops below zero

Re: Cities can cost effectively start their own utilities

#75

Post by jeffbee »

hypothesis wrote: post #72
jeffbee wrote: post #69

Earlier quoted context omitted.

Maybe, but it's also clear that rural electrification was a huge error. People should live in clusters of at least a handful of structures where it's practical and affordable to provision electric lines (and telecommunications), or they should be off the grid altogether. What we built in the 20th century was the worst possible thing: mile after mile of transmission and distribution equipment serving dispersed houses…

Eh, but we should not leave people without basics of civilization. Yes, it’s a subsidy, but benefits outweigh hoarding of wealth.

But we wouldn't have been "leaving" anyone. All this garbage was built in the 1970s because we incentivized it with subsidized roads and utilities. If we hadn't established those subsidies, all of these people would have lived in the established towns of Jackson or Ione, upon which they are totally dependent anyway.

Re: Cities can cost effectively start their own utilities

#76

Post by llamaimperative »

payne92 wrote: post #59

> It costs a lot of money to deliver power to rural customers Utilities (generally) have a universal service obligation. If someone can cherry-pick just the denser areas with lower distribution costs, of course they could "undercut" the utility with the requirement to serve everyone. (I'm not saying that PG&E couldn't be better managed. I'm saying that there's a much, much deeper policy issue at stake here.)

Land Value Tax solves this

Re: Cities can cost effectively start their own utilities

#77

Post by Aurornis »

shiftpgdn wrote: post #60
Aurornis wrote: post #46

The author estimates that electricity prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%. That’s a good hint that this hypothetical is missing some important details The article hedges against someone pointing this out by admitting that Walnut Creek is an unusually optimistic location and that PG&E is also recognizing large expenses related to ongoing infra…

What is PG&Es generation cost vs administrative and legal overhead? The 11% margin isn't a good basis number. How is other states like Texas or Colorado are delivering at 10-12c/kwh ? I do agree with your sentiment that city bureaucrats may be tempted to raid the energy business to pay for pet projects and other things. This can be protected against by segmenting the energy business into its own protected organizatio…

> What is PG&Es generation cost vs administrative and legal overhead? The 11% margin isn't a good basis number.

Administrative and legal costs don’t disappear when the city runs it, so why does it matter? When the city runs a utility, nearly all of the costs associated with running a utility still exist.

If your mental model of a city-owned utility is that they’re going to generate power and sell it at cost with no administrative overhead, you’re really just assuming that administrative overhead will be covered by taxpayers.

Electricity rates down, tax rates up.

> How is other states like Texas or Colorado are delivering at 10-12c/kwh ?

Texas produces the most crude oil, natural gas, and also wind generated electricity. A quarter of the entire country’s wind energy generation happens in Texas.

Comparing electricity prices across regions is meaningless. Everything is too different.

Re: Cities can cost effectively start their own utilities

#79

Post by knappe »

Boulder CO tried to do this, but failed. After a 10 year fight, Xcel's lobbying won out and the $29 million that was spent to start the process had been exhausted. We need more cities trying to do this to show how it can be done and done well.

https://www.cpr.org/2020/11/20/boulder-ends-decade-long-purs...

Re: Cities can cost effectively start their own utilities

#80

Post by Aurornis »

bitmasher9 wrote: post #52
Aurornis wrote: post #46

The author estimates that electricity prices would be reduced by up to 33% (from $0.45 blended rate to $0.30), but PG&E’s profit margins are only 11%. That’s a good hint that this hypothetical is missing some important details The article hedges against someone pointing this out by admitting that Walnut Creek is an unusually optimistic location and that PG&E is also recognizing large expenses related to ongoing infra…

I don’t think profit margin is the correct way to calculate their expenses. For one, it includes expenses outside of the municipality. For another, corporations are often okay overspending on executive compensation and other lavish business expenses for tax purposes.

> For one, it includes expenses outside of the municipality.

Exactly. The cherry picked example in the article was chosen to ignore areas with higher expenses.

> For another, corporations are often okay overspending on executive compensation

PG&E had $25 billion revenue last year. How much do you think they spent on lavish executive compensation? Even if you could eliminate $100 million in compensation (doubtful) that’s still less than 0.1% of revenues. People overestimate the impact of executive compensation in large companies by orders of magnitude.

> and other lavish business expenses for tax purposes.

Again, you’re not going to find dramatic savings anywhere in the budget by cutting lavish business expenses at this scale. It’s noise. There’s also a persistent myth that companies can spend their way into saving money via tax write-offs, but for some reason my accountant tells me that’s not how taxes work.

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