If theory weighs on the side of business providing more and lower cost power then why do Los Angeles citizens have more and lower cost reliable supplies of power?
Because sometimes privately owned businesses make mistakes (ie thinking the price of electricity was going to stay down, and demand would not grow so much). In this case also the LADWP appears to be run in a very "businesslike" fashion. They also were not hobbled by that stupid legislation and have some other advantages.
In the mid-1990s, the ``munis'', as they are called, braced for competition for their customer base from merchant power providers in the surrounding market by cutting fixed costs, reducing their debt load, boosting efficiency, and building cash reserves.
They also typically have lower rates because they pay no taxes, are not profit-driven, can borrow at reduced rates and some have access to federally subsidized power projects.
Their service territories and staff are also generally much smaller than the giant investor-owned utilities.
Municipals have not had to raise their rates in years, but some are keeping this as an option, Neuhedel said. Recent emergency rate hikes intended to staunch the bleeding at the investor-owned utilities could let the munis raise their own rates and still offer cheaper power than their neighbors.
biz.yahoo.com
Ignoring reality in favor of theory is proving to be a mistake.
The CA legislature is finding that out. :-)
Perhaps the LADWP model would be the best one for all of CA. LADWP has certainly proven itself better at long-range planning, since it doesn't have to worry about shareholders and Wall St. The trade-off there would be stability vs. the extra taxes, since the municipal utilities don't pay any and some are subsidized in other ways. (Always a catch, but right now I'm sure most people would think it was worth it.)
On the "cheap clean power and high growth" issue, I am extremely pessimistic that what passes for leadership in CA will be able to reconcile the many conflicting interests. The environmental lobby is very strong I believe and will fight any relaxation of environmental controls tooth and nail. The fact that more local drilling, generation, and power plant construction would have kept them out of this mess doesn't seem to matter to them, and I don't see that changing anytime soon. |
