Privatization of Public Infrastructure

[Superman]

This will likely get moved to PARF, though there shouldn't really be a need.

James had said:

The government doesn't own the phone system! Or the electric utility. There are some cities where the city owns the electric utility, but this is not generally the case. Most of the time, water is municipal, but not in my area. We have a regulated, private company which supplies our water.

The government used to own those things. In fact the government and the taxpayers built those infrastructure systems that private companies were subsequently permitted to, basically, lease so they could rent space in those systems to their customers, the taxpayers who built the systems in the first place.

Correct, true government electric utilites and PUD's have been replaced by private companies. This is how it starts. The private utilities are heavily regulated, essentially required to operate much like the old PUD's, but they have stockholders. Their earnings are....regulated by the public, which is also how their service is also overseen. By the public. Usually in the form of a state utilities "commission." The next step is to permit multiple private "utility" companies, which are really just brokers, to buy and sell commodities like electric power, at a profit. This is where regulation stops. These "brokers" are not overseen by any commission.

One impact is that small development essentially stops. Nobody's going to build a house at the end of Rural Road because the the cost of bringing utilities out there will be prohibitive. The brokers will all be busy vying for the Reynolds Aluminum contract. Currently, regulated utilities are encouraged to participate in grid-expansion. Otherwise, they'd focus on kilowatt-packaging.

Final note......it's sad James, that you have a regulated water utility. Sad because that is the first step in this process. It's also good though, since the buying and selling and volume-packaging by brokers has not yet begun. When that happens, your water bill will not go down.

Once water is captured, I'm sure some folks will get to work on how to get control of the air supply. Now THAT will be a tremendous opportunity for earnings and profits. United Oxygen Brokers, Inc.

[Jim Bremner]

hell, as messed up as we are let's sell ads on the USD!

[lane912]

superman, please aply your equation information and the media-

[red-beard]

Originally Posted by Superman

This will likely get moved to PARF, though there shouldn't really be a need.

James had said:

The government doesn't own the phone system! Or the electric utility. There are some cities where the city owns the electric utility, but this is not generally the case. Most of the time, water is municipal, but not in my area. We have a regulated, private company which supplies our water.

The government used to own those things. In fact the government and the taxpayers built those infrastructure systems that private companies were subsequently permitted to, basically, lease so they could rent space in those systems to their customers, the taxpayers who built the systems in the first place.

Correct, true government electric utilites and PUD's have been replaced by private companies. This is how it starts. The private utilities are heavily regulated, essentially required to operate much like the old PUD's, but they have stockholders. Their earnings are....regulated by the public, which is also how their service is also overseen. By the public. Usually in the form of a state utilities "commission." The next step is to permit multiple private "utility" companies, which are really just brokers, to buy and sell commodities like electric power, at a profit. This is where regulation stops. These "brokers" are not overseen by any commission.

One impact is that small development essentially stops. Nobody's going to build a house at the end of Rural Road because the the cost of bringing utilities out there will be prohibitive. The brokers will all be busy vying for the Reynolds Aluminum contract. Currently, regulated utilities are encouraged to participate in grid-expansion. Otherwise, they'd focus on kilowatt-packaging.

Final note......it's sad James, that you have a regulated water utility. Sad because that is the first step in this process. It's also good though, since the buying and selling and volume-packaging by brokers has not yet begun. When that happens, your water bill will not go down.

Once water is captured, I'm sure some folks will get to work on how to get control of the air supply. Now THAT will be a tremendous opportunity for earnings and profits. United Oxygen Brokers, Inc.

All I can say is no. Your history is flat wrong. AT&T was always a private company. It was never owned by any government. The "government" did not build, nor did it own the "infrastructure".

This was the case in many other countries, but not in the USA. Supe, where do you get this stuff?

[genrex]

Rural Electrification program to get electric to rural areas. That was a government program. I'm not sure how a large government-financed project transitioned to private companies with shareholders.

Rural telephone service was about the same time, just two generations ago. Party lines, two longs and a short, man. Was that private-company financed?

_

[red-beard]

Originally Posted by genrex

Rural Electrification program to get electric to rural areas. That was a government program. I'm not sure how a large government-financed project transitioned to private companies with shareholders.

Rural telephone service was about the same time, just two generations ago. Party lines, two longs and a short, man. Was that private-company financed?

_

It was a government loan program. It was all done privately.

[red-beard]

Rural Utilities Service - Wikipedia, the free encyclopedia

REA made loans available to local electrification cooperatives, which operated lines and distributed electricity.

[Superman]

And frankly, I'd be fine with all this deregulation crap if there were a provision for a public competitor in these markets. Or at least a nonprofit co-op. But that's not how it works. When an industry is privatized, the new model does not tolerate a competitor in the market that is still a 'public' utility. That would be unfair, they say. It would put the private companies at a competitive disadvantage because of their obligation to return an attractive ROI to the stockholders. Governments and co-ops don't have this expense. Privatization doesn't work unless the playing field is leveled by prohibiting a non-profit competitor.

Another current privatization attack is on the US Postal Service, and it's been very successful so far. Underfund the agency sufficiently that it can be seen or characterized as "inefficient." Go to town with a public defaming campaign. This sets the industry up for privatization. Does anybody think that FedEx is going to deliver your First Class Mail for $0.44 per piece? If so, I have a real estate deal that will make you filthy rich.

[Superman]

Oh, and James.......perhaps you are right about AT&T. And I see you've posted a link to a Wiki page discussing rural utilities.

If you really wanted to get to the heart of the only aspect of privatization that actually makes sense, you'd focus on its tendency to draw capital. Multiple private power brokers, or water brokers, or air brokers or whatever, cannot and will not be more efficient than a true public utility. But there is something they can bring to the industry that gubmit cannot. Capital. That is what happened, ultimately in telecommunications. Might actually be a good thing. I'm not an idiot. The explosion of communications infrastructure occurred because privatization caused it to make sense for investors to vote with their dollars, infusing the industry with bazillions in development capital.

If you're looking for a defense of privatization, that's the one.

[red-beard]

The was no "privatization" of the communication infrastructure. The Government allowed a mandated monopoly. When the government "deregulated" and allowed competition, the technology advanced and prices came down.

If we still had the fully regulated airlines, the way before deregulation, a plane ticket which was $1000 across the country in the 1970's, would be $10,000 today!

[red-beard]

Now back on the subject of Electric Companies. Example, New York City. The company is Consolidated Edison. It has always been an investor owned corporation. They built the infrastructure or aquired the other investor owned companies that did.

Consolidated Edison - Wikipedia, the free encyclopedia

Now, do some research on your own local utility, and get back to us on how it started, who invested in it, etc.

[RWebb]

by definition a "utility" is something that either belongs to the public or the public has such an over-riding interest in it that it is administered by a private entity that in turn is carefully regulated by govt.

water is a fun example, and you can spend a lifetime studying water law

George Will had a good column on this long ago - he gets the concept but was aghast that people were treating cable TV as a public utility

[Superman]

George Will is a bufoon.

[rusnak]

government didn't build the railroads or telegraph lines either.

Some of the municipal water districts are very large, and very powerful, and run like a private company. And they are not all meritorius. Read up on the LA Dept Water and Power. And cross reference Daniel Yergin, and a little ol book titled "Cadillac Desert".

I don't get the statement about how electric and water is so expensive in rural areas that "development stops". That's crazy talk. If anything, it's available very very dirt cheap compared to the costs to bring service in, and maintain it. I know because we have hundreds of thousands of square miles of remote and very rural neighborhoods around here, and they all have electric power and most but not all have telephone service.

[Superman]

Originally Posted by rusnak

I don't get the statement about how electric and water is so expensive in rural areas that "development stops". That's crazy talk. If anything, it's available very very dirt cheap compared to the costs to bring service in, and maintain it. I know because we have hundreds of thousands of square miles of remote and very rural neighborhoods around here, and they all have electric power and most but not all have telephone service.

Yes. And you think this would be the case if privatization had been prevalent during that development? You think private companies would have been willing to underwrite those utility extensions? For the $200 per month in revenues they would achieve? No. They would have expended their capital where volumes would be sufficient to recoup their investment much more quickly. You want power? Pay $80,000 for the ditching and permitting and conduit and red concrete, blah blah.....or light your house with oil lamps.

[rusnak]

I'm not sure where you're getting your information, friend. PG&E and Southern Cal Edison are "private companies" in regards to ownership. Meaning, they are public utilities that are privately held. And although there are city owned utilities, such as the City of Morro Bay for example, they do not offer utilities any cheaper than private utilities.

We can look at the most remote regions, say at 8,000 ft in the Sierra Nevada mountains. We had a cabin up there and we paid So Cal Edison way less than it costs to run cables from the power plant. They use every trick in the book to keep costs down, and they'll be amortizing their investment well into the next millenium.

[rusnak]

And to continue.....new developments run power from the transformer (utility side) to the meter. The public utilities are only responsible for bringing power to the transformer, which can be several hundred feet from your meter or more, and it serves several meters in most cases.