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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

#111

Post by MichaelZuo »

sb057 wrote: post #103
MichaelZuo wrote: post #99

Earlier quoted context omitted.

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.

How is that evidence?

The expectations, regulations, and imposed demands, are not 100% identical across all utilities. So any combination of factors could lead to higher prices.

Re: Cities can cost effectively start their own utilities

#112

Post by mindslight »

mauvehaus wrote: post #51
mindslight wrote: post #13

Earlier quoted context omitted.

Construction itself isn't that expensive. It's certainly possible to self insure and accept that living in an area prone to fires means your house might burn down. It goes against the prevailing culture of the ever-growing housing bubble, but financialization has to hit its limits some time.

Self-insuring is probably not going to fly with your mortgage lender. If nobody can get a mortgage, and everyone has to self-insure, it's going to 1) drive down housing prices (fewer cash buyers) and 2) guarantee that only people of pretty substantial means can afford to live there (even with lower prices, most people can't come up with a cash payment for a house).

I did acknowledge it would go against housing bubble culture. It certainly wouldn't be a financially prudent way of obtaining primary shelter, but rather for vacation homes or whatnot. We're mostly talking about rural properties in the woods, right?

Re: Cities can cost effectively start their own utilities

#113

Post by nwiswell »

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…

As of 1/1/2025 the residential average rate paid for the municipal utility of Santa Clara, CA is $0.175/kWh vs a residential average of $0.425/kWh for PG&E

https://www.siliconvalleypower.com/residents/rates-and-fees

PG&E has an 11% margin on those rates because they keep burning the state down and having to pay for it. Municipal utilities don't have to worry about that.

The only thing that could be seriously considered a downside is that Santa Clara, CA is now absolutely jam-packed with data centers that have low employment per sqft.

Re: Cities can cost effectively start their own utilities

#114

Post by MichaelZuo »

_heimdall wrote: post #104
MichaelZuo wrote: post #99

Earlier quoted context omitted.

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.

Why are you asking me when their financial statements are available online for you to read?

I don’t have some special insider scoop to know whether the numbers listed in the statements are real or fake.

Re: Cities can cost effectively start their own utilities

#115

Post by legitster »

I'm as capitalist as they come, but I think privatizing natural monopolies makes no sense.

In our area, they handed over all school bus services to a private firm. The number of drivers, buses, and routes do not change. How was it supposed to save costs without degrading the service? The answer is, it did not. But administrations were diluted that they could take it off their liabilities.

Re: Cities can cost effectively start their own utilities

#116

Post by mmooss »

rightbyte wrote: post #94

Social democracy in fashion again?

It's interesting that in some HN discussions, all the arguments for (in this case) public ownership are valid and the advantages of private ownership seem to be completely forgotten. And in other discussions, it is vice-versa.

I think that reflects the broader public. If you can get people in one or the other mode, they will forget what they knew 24 hours ago.

Personally, I think private ownership and public ownership are two tools in the toolchest, good for different tasks. In many cases, privatization is a capitalist who notices a large, reliable cash flow, such as public utility revenue, and wants a cut of it. Public ownership can suffer from a lack of innovation - perhaps that matters less for mature technologies.

Re: Cities can cost effectively start their own utilities

#117

Post by gojomo »

PG&E's absurdly high rates are how they finance the careers of Governor Newsom & his wife, and "donations" to a giant array of other pet project "charities" for politicians & their favored cronies/causes.

https://www.washingtonpost.com/business/2019/11/11/pge-helpe...

https://www.sacbee.com/article251851903.html

Why would any of California's uniparty establishment want to refund all that money to random utility customers – who might not even be reliable party footsoldiers?

PG&E's lowest overnight rates are 30¢/kwh, surging during peak hours to rates ranging from 39¢/kwh to 72¢/kwh.

In neighboring Nevada, the utility serving its major metros NV Energy has rates of 11¢/kwh for residential users & 7-9¢/kwh for small businesses.

Re: Cities can cost effectively start their own utilities

#118

Post by abathur »

jf wrote: post #93
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…

The highest price that the city owned electric utility in Alameda, CA charges on the standard rate schedule is $0.29453 / kWh https://www.alamedamp.com/DocumentCenter/View/1268/FY25-Rate... Edit: Oh, this utility runs at a profit and has for decades. The profits have been going into undergrounding transmission lines

Not trying to neg how you phrased it, but I wonder if the whole damn system would be a smidge better if we had strong well-worn widely-used terms to discriminate between profit-taken and surplus-reinvested (and maybe to further discriminate between unrelated r&d, related r&d, and direct performance/capacity/resiliency/etc. investments)

Re: Cities can cost effectively start their own utilities

#119

Post by mmooss »

jmyeet wrote: post #54

It never ceases to amaze me how often people will make socialist economic arguments (that are objectively correct) yet eschew the label "socialism". An enterprise, like providing a utility, has revenues and it has costs. The difference between the two can be called the "surplus labor value". What happens to that depends on the economic system. In capitalism, capital owners own that enterprise (utility) and they sipho…

Do you think public ownership would have yielded the development of modern IT, for example?
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