Privatization of the power grid

[Sirotnikov]

So which one of you had the pleasure of having his electric company privatized?
How did it go?

How did that affect power availability? Prices?
Both short term and mid-term.

I'm very interested because there's a significant chance that it'll happen in Israel in the next 5 years.


My gut says that this will bring increasing prices and poor service for several years, followed by large drops of price after the market stabilizes and the main players are left.

[Victor Galis]

Unless your government-run company is terrible, you can reasonably expect terrible service and price hikes, or worse:

See California's rolling blackouts when they privatized their system.

Once the market stabilizes and there's only a couple providers left, they know you don't have many choices and continue squeezing you for money while treating you badly. For service to be good and prices to be low you'd have to have many competing firms, which you won't in electricity generation.

[FrostyBoy]

Privatizing is ****. Happened in NZ, now they can't fix the problems. Govt has to bail them out. Blackouts are too common. Of course, in NZ, there was only one company.

You really need a lot of strong competition for it to work well.

[Dinner]

VG, we've always had privately owned power companies out here. What caused the rolling blackouts was the deregulation of the utilities which companies like Enron abused by shutting down power plants in order to cause an artificial shortage of electricity so that prices spiked through the roof. The whole Republican mantra against regulations really is stupid because a lot of time regulations are there for a very good reason.

[trev]

Things have been privatised in Australia in most states, service marginally declined as blackouts take a little longer to fix, they downsized on linesmen after privatization. Government sold the system both to get money for it and to avoid large renewal costs as the infrastructure was beginning to age.
Now they have increased prices a bit so they can spend more money on renewal of the infrastructure.
Personally I think the same would have happened in government hands except they may have waited longer to renew the system and put up prices, with the obvious result of old equipment breaking down more.
Regulatons here force companies here to keep system to a certain standard as there are penalties for excessive breakdowns of the systems, long blackouts etc. While in government ownership there were no such penalties and therefore no incentive to spend enough to maintain the system.
Private ownership is possibly best option if backed by sufficient regulation and penalties for inadequate service.

[Az]

Our glorious leadership cannot do wrong! we must privitize and lower taxes now, so that we will have tax revenue to cover our rapidly increasing costs! (note: costs didn't actually increase)

All hail Benjamin Nethaniyahu, the greatest economist alive (dude has an MBA. I am a year away from having the same)


:/

[chequita guevara]

The best customer service I had was in Jacksonville, which has a municipal owned power company. The worst is the privately owned Florida Power and Light, which runs things down here. Commonwealth Edison, a privately run company in Chicago was somewhere between the two.

[Kidlicious]

VG, we've always had privately owned power companies out here. What caused the rolling blackouts was the deregulation of the utilities which companies like Enron abused by shutting down power plants in order to cause an artificial shortage of electricity so that prices spiked through the roof. The whole Republican mantra against regulations really is stupid because a lot of time regulations are there for a very good reason.

It wasn't just deregulation. It was the removal of price controls.

[tinyp3nis]

Hooray!

The 2004 release of transcripts of taped conversations among Enron electricity traders in the summer of 2001 revealed that company insiders not only knew they were stealing from California and other states, but gloated about it. The release of thousands of hours of tapes was a powerful indictment of the energy companies that looted California and Washington of close to $11 billion.

At a time when streets in Northern California were lit only by head lights, factories shut down and families were trapped in elevators, Enron Energy traders laughed:

"Just cut 'em off. They're so f----d. They should just bring back f-----g horses and carriages, f-----g lamps, f-----g kerosene lamps."

[Ben Kenobi]

We just had our rates massively raised. I'm all for privatisation, they can't run anything worse then the bozos in Victoria.

[VetLegion]

I think it's a bad idea. Whether one wants it or not there is no room for hundreds, not even dozens of suppliers in a moderate size country. Power generation and transport are both monopolies or oligopolies at best. I'm generally pro-market but I'm against privatizing monopolies.

[DanS]

See California's rolling blackouts when they privatized their system.

Please try to keep privatization and deregulation straight. The US has had a primarily private system (for-profit and co-op) since the beginning.

[Zkribbler]

Please try to keep privatization and deregulation straight. The US has had a primarily private system (for-profit and co-op) since the beginning.

Right. It was deregulation that caused our problems. That, plus preditory practices by Enron, Duke Power and others.

You really need a lot of strong competition for it to work well.

It does not make sense to have competiting power grids. How many sets of power lines over your house do you want??

No competition means a monopoly, and the only thing that saves the public is public control, either by regulation or by government ownership of the monopoly.

[Blaupanzer]

All hail Benjamin Nethaniyahu, the greatest economist alive (dude has an MBA. I am a year away from having the same) :/

The latest Bush was an MBA as well. He fiddled while the world economy went up in flames. In the top ten lists economics professionals tend to keep, the issue is how many of which economic theory (school) to admit to the lists. In all that fussing, Nethaniyahu has never come up as the "greatest."