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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

#221

Post by gnopgnip »

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…

Until recently I lived in Alameda with AMP for municipal power. Consumers pay about half what PG&E charges. AMP has a net profit and provides some revenue for the city each year. You can see the most recent financial statement here. https://www.alamedamp.com/DocumentCenter/View/1187/AMP-ACFR-...

Sacramento with SMUD is another success story. But there are some differences with economies of scale

Re: Cities can cost effectively start their own utilities

#222

Post by amluto »

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 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%.

One detail is that PG&E is a heavily and (IMO) incompetently regulated utility, and their profit margins are more or less set by regulation. So they inflate costs to drive up profits, and one should not assume that the only room for savings is removing their profit margin.

Re: Cities can cost effectively start their own utilities

#223

Post by pwrson »

xienze wrote: post #128
AnotherGoodName wrote: post #71

Earlier quoted context omitted.

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.

Yeah it might be easy for municipal electricity to win on price when the bar is set at $0.42/kWh. Out here our evil private company is charging $0.11/kWh. I have serious doubts any municipality anywhere could deliver power for half that.

Cleveland Public Power rates online are <$0.10/kWh in the summer and <$0.05/kWh in the winter.

Re: Cities can cost effectively start their own utilities

#224

Post by econ »

ksec wrote: post #192
tmnvix wrote: post #105

Earlier quoted context omitted.

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 actu…

I would argue that if something may not fail you can only pretend to privatize. You only privatize the profit during the good times.

Our railroads paid a nice 300m in divident every year then corona came, people were told to stay home. You can guess who had to pay for the lack of travelers.

The most silly are ISP's. The prices in each country depend on how much people can pay and what you get for it is rng

Re: Cities can cost effectively start their own utilities

#225

Post by pfdietz »

kelseyfrog wrote: post #166
pfdietz wrote: post #164

Earlier quoted context omitted.

This is where distributed renewable sources can apply. Supplying a remote home with solar and storage is probably cheaper than running a distribution line to it.

I don't disagree. However, there is a positive feedback cycle lurking that can spin out of control faster than a behemoth corporation or government can react to.

The underlying problem is that utilities are set up assuming their capital investments pay out over an extended period, but the technology is now changing over shorter timescales. The electric power industry is changing at a rate that it hasn't seen for over a century.

Re: Cities can cost effectively start their own utilities

#226

Post by eldaisfish »

toomuchtodo wrote: post #213
nocoiner wrote: post #188

Earlier quoted context omitted.

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.

Rural electrification was needed at the time. In many cases, it no longer is (distributed generation, microgrids, etc vs large, distant generators having to transport power to residential load centers). This is very similar to how Africa will leapfrog the legacy model with cheap solar and batteries. In Australia, they have a model of colocating stationary battery storage in neighborhoods to balance buffer solar produ…

this is entirely wrong. There is no world in which rural areas can substitute the power grid with anything you described. It is not possible - in the absolute sense - to match the power grid's reliability and stability with a bunch of local solutions. The cost is another matter but take Canada - the lowest electricity rates in the OECD.

The local solution to solve local problem absolutely works, but that is not what you are describing.

Africa is not going to substitute a continental scale grid with solar and batteries. That's just pie-in-the-sky levels of delusion.

Re: Cities can cost effectively start their own utilities

#229

Post by eldaisfish »

pfdietz wrote: post #164
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…

This is where distributed renewable sources can apply. Supplying a remote home with solar and storage is probably cheaper than running a distribution line to it.

if your needs are fairly basic, sure. As soon as you add modernity, solar and storage for every house/region is cost-prohibitive.

Re: Cities can cost effectively start their own utilities

#230

Post by s1mplicissimus »

pclmulqdq wrote: post #162
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…

It sounds like your city was overprovisioned in terms of how much electricity they could supply, and you had the benefit of the cheapest power around (hydroelectric power is very cheap), so when you got plugged into the wider network that the power company was servicing, you got screwed. There's a good chance that power for neighboring towns got cheaper and/or more reliable after the deal given what happened with you…

Your conclusion is a false dichotomy. A third option is that shareholders of the private company fattened up their profit margins.
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