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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

#101

Post by apercu »

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…

That basically describes my area. There are 3 streets (2 connect, the 3rd doesn't). There are 11 houses on my (dead end) street and maybe 25 on the other two streets.

Because of this clustering - I live in a pretty rural area - but have natural gas and cable internet (only one option, so not that awesome).

But, I also have a well and a septic system. And I'm very thankful. As I was moving back to the US after 2 decades in a city, I did a winter with no high speed internet (used a mofi router with a SIM card as Starlink was overprescribed in the area) and propane for heat. It was a small house but heating with propane is crazy expensive.

Re: Cities can cost effectively start their own utilities

#102

Post by apercu »

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.

Right? I once ran a private company where there primary shareholders (who didn't work inside the organization) used to complain about the margins because they liked to calculate profit margin _after_ taking significant dividends.

Re: Cities can cost effectively start their own utilities

#103

Post by sb057 »

MichaelZuo wrote: post #99
dv_dt wrote: post #90

Earlier quoted context omitted.

Profit margins don't reflect how efficiently they manage costs. It could as easily be the case the PG&E mismanages resources and costs more to deliver the same power.

Is there any evidence for how they’re wasting such a huge amount of money year after year?

The fact that they charge significantly more money than virtually every other utility company in the country (and indeed, within California) with comparable margins is pretty good evidence I feel.

Re: Cities can cost effectively start their own utilities

#104

Post by _heimdall »

MichaelZuo wrote: post #99
dv_dt wrote: post #90

Earlier quoted context omitted.

Profit margins don't reflect how efficiently they manage costs. It could as easily be the case the PG&E mismanages resources and costs more to deliver the same power.

Is there any evidence for how they’re wasting such a huge amount of money year after year?

Maybe I'm naive here, but isn't any company at a similar scale regularly finding ways to reduce profits on paper? Taxes add up fast when you don't have expenses to write off, and my understanding was that most effective ways to reduce tax liability would also reduce profit margins.

Re: Cities can cost effectively start their own utilities

#105

Post by tmnvix »

rmason wrote: post #86

I used to live in a small town in Michigan which had city provided power using a dam. It was inexpensive and highly reliable. But every couple of years the big power company in the state would try and get the city to sell them the utility. After I moved a city council for whatever reason ended up selling. As a result the cost of electricity immediately doubled and power outages occurred regularly due to reduced maint…

Perhaps I'm too cynical, but somehow I doubt that those with decision making power that were in favour of selling at the time regret much.

Our modern political economy is almost entirely focused on ensuring that everything that can be sold to private entities (read, the market) is. In this ideology the sale would be viewed as a success regardless of any practical downsides.

Re: Cities can cost effectively start their own utilities

#106

Post by kelseyfrog »

UncleEntity wrote: post #89
kelseyfrog wrote: post #84

Of course it's cost effective for cities to start their own utilities, the economies of scale work in favor of urban and suburban electrification and maintenance. What isn't effective is electrification and maintenance of low density regions although power monopolies like PG&E are required to provide service. The urban and suburban customers are effectively subsidizing the cost of transmission and maintenance for rur…

Sure, PG&E implodes but then who manages Diablo Canyon and who delivers electricity to the unprofitable rural areas? I left California last century but seem to recall the PUC(?) has a pretty tight reign on what PG&E does and doesn't do.

Unfortunately rural inhabitants have been free riding on a grostesquely distorted market for decades. It may be hard for them to swallow the idea that they will have to pay market rates for transmission and maintenance, but they should also be the first to agree that despite this, it's ultimately a more fair order han getting what essentially amounts to a handout today.

Re: Cities can cost effectively start their own utilities

#107

Post by jeffbee »

fooker wrote: post #81
jeffbee wrote: post #75

Earlier quoted context omitted.

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.

> all of these people would have lived in the established towns And I assume your food would be conjured magically?

None of the people in the area to which I referred are undertaking anything productive. Food comes from farms, like always.

Re: Cities can cost effectively start their own utilities

#108

Post by Ekaros »

tmnvix wrote: post #105
rmason wrote: post #86

I used to live in a small town in Michigan which had city provided power using a dam. It was inexpensive and highly reliable. But every couple of years the big power company in the state would try and get the city to sell them the utility. After I moved a city council for whatever reason ended up selling. As a result the cost of electricity immediately doubled and power outages occurred regularly due to reduced maint…

Perhaps I'm too cynical, but somehow I doubt that those with decision making power that were in favour of selling at the time regret much. Our modern political economy is almost entirely focused on ensuring that everything that can be sold to private entities (read, the market) is. In this ideology the sale would be viewed as a success regardless of any practical downsides.

I think this is just the end-stage failures of social democracies. Fund the things now, even if it means selling anything that can generate slight profits in long term. Or provide basic services at reasonable rates. Eventually everything is sold and out sourced, money has been wasted on buying votes and the debt is maxed out. Then the system will fail...

Re: Cities can cost effectively start their own utilities

#109

Post by vegetablepotpie »

abeppu wrote: post #12

The author mentions the cost of buying out the distribution network, and cites SF's failed attempt to do this. The author tries to figure out the price for Walnut Creek's grid based on inflation and population -- but the $2.5B figure this is based off was rejected by PG&E. The messed up thing is PG&E as a monopoly can set the price wherever they like -- and they can demand substantial continuing payments to connect t…

The build a duplicate distribution grid is effectively what Ann Arbor is doing with its Sustainable Energy Utility, approved by voters in November [1].

[1] https://www.a2gov.org/sustainability-innovations-home/sustai...

Re: Cities can cost effectively start their own utilities

#110

Post by darth_avocado »

dv_dt wrote: post #90
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…

Profit margins don't reflect how efficiently they manage costs. It could as easily be the case the PG&E mismanages resources and costs more to deliver the same power.

Profit margins are low because they need to pay $20M in opex for the CEO’s bonus.
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