in situations where you want or need to look into "uninterruptible power backup" at even a reasonably small scale (e.g. a large apartment building or a hospital), given the cost and durability of a diesel generator, once you've bought and installed one, turns out you might as well run it. Varying economic and regulatory conditions can make it more or less viable, but it's in the range of feasible.
Cities can cost effectively start their own utilities
191–200 of 411 posts
Re: Cities can cost effectively start their own utilities
#192I 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.
>In this ideology the sale would be viewed as a success regardless of any practical downsides.
In other places on earth, selling public utility requires the company to operate at similar or better level of services previously provided while retaining the cost. And those deals are mostly regulated, penalties when not meeting them.
And it used to be, may be in rare cases the people in Government making those deals actually knows what they are getting out of it, so the contract are all well written.
Now it seems they are selling because 1. They dont have money. 2. They are running it poorly. 3. They are bribed or have incentives to sell it. All with no caring of how the people they serve were getting any good value out of it.
Re: Cities can cost effectively start their own utilities
#193Earlier quoted context omitted.
I'm a little unsure how to take you here, because I avoided dragging the efficacy of an investment into frame on purpose. Maybe you just mean to tack on the idea that we could benefit from having better language to separate shrewd and incompetent investments, in which case I'm ~fine with some language to retcon the difference between merely lighting investments on fire and using them to drive an engine back on to tho…
> (Edit: In case I'm being obtuse, I at least think I agree that "investing" surplus in hiring and retaining great employees is a surplus-invested, and not a profit-taken.) So the executive compensation packages that many people hate on then are just a mechanism to reduce the profits of the company. And it’s not clear to me that Apple saving up profits so they can make larger investments without taking out loans is a…
(It feels like you are talking like you're gotcha-ing me, but I don't feel like I am trying to address any of these problem at the level you are focused on.)
I wouldn't say surplus held to be invested, even for many years to support a large capital project, is profit-taken. The surplus isn't being taken. (But, as before, I do still think it may be worth discriminating between related/unrelated, because this is somewhat relative. A large for-profit utility could extract surplus from most of its regional markets and plow it all into supreme resiliency for the city its headquarters is in...)
Designing good incentives or tax policy are very different problems than having slightly better vernacular for average people to use to distinguish between patterns of organizational behavior that throw surplus in a bin for a truck to take away and those that toss it in a compost pile for on-site use.
Accountants and auditors can classify inflows and outflows however they like--but I think specific problems like good incentives are more tractable when common people can leverage simple language to build the understanding and support that policy wonks will need to dial in incentives or tax policy.
Re: Cities can cost effectively start their own utilities
#194Earlier quoted context omitted.
It's the end state of neoliberal policies . That's the ideological tendency that actually has the obsession with markets and strangling government capacity to do anything other than be a spigot for tax dollars. Scandinavian social democracies aren't perfect but they don't suffer from these entirely predictable problems to nearly the same degree.
I think one problem is that most people confuse private ownership with "the market". Just because a utility company is owned and operated by a private entity does not mean it is influenced by market forces. Utilities fall under a natural or technological monopoly. Due to space constraints it is not desirable or efficient to have multiple companies run pipes, cables, or other infrastructure alongside each other to com…
I think a related thing that many people get confused by is the idea that market forces even exist. It's very rare these days to find industry segments where participants actively compete on quality or price. The whole idea is a holdover from how business was done 40 years ago.
Re: Cities can cost effectively start their own utilities
#195I am a city council member in small city (9,000) which owns and operates a municipal electric power plant. We have 4 large diesel generators, two large wind turbines and a few fields of solar panels.
It is nice having power on 24/7, if there is an outage we simply fire up a diesel generator and power is restored in just a few minutes.
We do have to buy power on the grid but also have times where we sell power back (summer, when people use AC prices go up and our solar panels typically generate excesss and profit)
The price of power is almost identical to those outside of the city. Honestly keeping as many derives local really has been a win/ win for our community.
Re: Cities can cost effectively start their own utilities
#196Earlier quoted context omitted.
It's the end state of neoliberal policies . That's the ideological tendency that actually has the obsession with markets and strangling government capacity to do anything other than be a spigot for tax dollars. Scandinavian social democracies aren't perfect but they don't suffer from these entirely predictable problems to nearly the same degree.
Neoliberalism fails because of what economists call "the theory of the second best". Neoliberalism fundamentally assumes that the best practical system is as close as possible to an ideal free market, but it's not, due to local minima (often ones we've already found!) often being better. The best system is a free market, if possible. But the second best system may not be close to the best system, it may be a local mi…
I think it's very important to define who's being optimally served when declaring a market ideology "best". Free markets are demonstrably better at servicing capital, but I'm pretty sure that doesn't equate to optimum outcomes for the proletariat (why isn't there a better word for this, I can just see the redbaiting coming from a mile away).
Re: Cities can cost effectively start their own utilities
#197Earlier quoted context omitted.
I'm the author here. The cost savings come from not having people who live in cities pay for undergrounding lines and maintaining power lines in rural areas. Maintaining the city networks is much cheaper. This is why Santa Clara, Palo Alto and Alameda's power companies can deliver power for half of what PG&E can. You can just copy their cost structure.
Cool. Now you’ve just undone 70 years of rural electrification in the United States. Optimizing for factors other than universal service is completely valid, but I’m guessing each of those municipal power systems pre-dated rural electrification and thereby get to somewhat free ride on the system more than anyone would reasonably allow Walnut Creek to do in the year 2025.
It's probably more efficient for society to subsidize micro grids using solar and wind and batteries for rural electrification than to bury all the power lines that it'll take.
A $100 million project to bury the lines to 1000 houses is $100k per house which just ain't worth it. Not saying this is a real number but it could easily be if it's costing $0.20/kWh to do distribution.
Re: Cities can cost effectively start their own utilities
#198Earlier quoted context omitted.
One hint is that all the businesses that have the highest market capitalization earn the highest profit margins and profits. Dividends and share buybacks happen with those profits. If profits are less, then dividends and share buybacks are less, which means less money for shareholders. It makes no sense to forego $0.80 in your pocket because you do not want the government to get $0.20.
> One hint is that all the businesses that have the highest market capitalization earn the highest profit margins and profits. I’m far from expert here, but is that too simplistic? Where does perceived future value come into this? I’m thinking of companies like Amazon, which kept profit margins low while obviously having their shit together.
Actual results > perceived future profit margins > consistently low profit margins.
https://companiesmarketcap.com/
Amazon clearly has a mix of a high profit margin business (AWS and other services) with a low profit margin business (retail).
You will notice that most the top businesses are pretty much high profit margin tech and pharmaceutical businesses. Some oil and finance after that. And there are a few lower profit margin, but still large profit since the business is so large, but obviously, high profit margins and high profit is better than low profit margin and high profit.
Re: Cities can cost effectively start their own utilities
#199Earlier 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.
Profit margins are low because they need to pay $20M in opex for the CEO’s bonus.
Profit margins are set by the state utility control board. The board says 11% profit Max, so that is what all of the major utilities make. The challenge is that with a fixed profit percent, they have a heavy incentive to maximize open. You can spend $10 and make $1.1 or spend $100 and make $11.
It's a very problem to the healthcare market. Health insurance also has fixed profit, therefore there is a huge incentive to drive up costs. Better to make 15% on a $10,000 drug then 15% on a $10 one.
Re: Cities can cost effectively start their own utilities
#200Earlier quoted context omitted.
I think one problem is that most people confuse private ownership with "the market". Just because a utility company is owned and operated by a private entity does not mean it is influenced by market forces. Utilities fall under a natural or technological monopoly. Due to space constraints it is not desirable or efficient to have multiple companies run pipes, cables, or other infrastructure alongside each other to com…
I think a related thing that many people get confused by is the idea that market forces even exist. It's very rare these days to find industry segments where participants actively compete on quality or price. The whole idea is a holdover from how business was done 40 years ago.
And with today's investors just buying funds/picking some 'group' on the 401k website, they aren't investing in a company, counting on receiving dividends from the company for the rest of their lives, and therefore forcing the company to be healthy. Instead they are counting on the stock going up short term, something totally different than buying and holding for dividends. And they just keep putting money into the generic pools of XYZ stock fund, again not a specific stock that they then hold accountable for anything. In fact they can't even punish a specific company by selling it's stock, only an entire ETF or 401 fund that the company is buried in.
And then there's dark pools. Trading isn't even done on the market anymore.