Keep in mind utility economics is pretty screwed up. So nobody wants multiple power lines running around so the government only allows one utility at least as far as distribution. In Southern States it’s generation and distribution. There are some private generators but it’s pretty awful. Most don’t survive long term,
Now as multiples have said nobody wants the utility to make a “profit”. Realistically I’ll say “excess” profit. So most are limited to around say 8%. So the way it works is they all have various rate schedules which a public utility board agrees to. These are all public documents. It’s very easy to find them and very important to understand them in many states. But the fact is that those public utility boards and various public advocacy groups monitor the utility profit along with the shareholders. So no matter what the utility is only going to make a cettain percentage.
So given this environment and the fact that a for profit utility is supposed to make money for shareholders and the expectation is that profits increase over time there really is only two ways to do it. The first is get more customers. Unless you are on the generation side and inside of a very progressive grid like PJM though other than population growth it’s simply not possibly to grow the customer base. So that means you increase costs and then demand rate increases. So if the government wants to kill nuclear and coal, the #1 and still #2 cheapest fuel sources and “twist your arm” to use more costly gas, solar, and wind, why you happily oblige. Similarly you do every crazy insane safety policy, grossly increase wages and benefits, and stretch out every construction project to make everything as expensive as possible. Utilities don’t have a great safety record but they are experts in pencil whipping and creating massive pointless procedures. This is all because the system naturally encourages them to be as inefficient as possible. Changing to a publicly owned entity is no better. All the not for profits and municipal run utilities are just as bad, if you want cheap power somehow competition has to be introduced. Making generation profitable and allowing customers to choose their generator is one way. By the way, most of Texas used to be powered by Luminant/Texas Utility mostly using lignite in some very clever and low cost systems. They started subsidizing wind and solar which shut down the lignite power plants and the result is huge reliability problems.
Now as multiples have said nobody wants the utility to make a “profit”. Realistically I’ll say “excess” profit. So most are limited to around say 8%. So the way it works is they all have various rate schedules which a public utility board agrees to. These are all public documents. It’s very easy to find them and very important to understand them in many states. But the fact is that those public utility boards and various public advocacy groups monitor the utility profit along with the shareholders. So no matter what the utility is only going to make a cettain percentage.
So given this environment and the fact that a for profit utility is supposed to make money for shareholders and the expectation is that profits increase over time there really is only two ways to do it. The first is get more customers. Unless you are on the generation side and inside of a very progressive grid like PJM though other than population growth it’s simply not possibly to grow the customer base. So that means you increase costs and then demand rate increases. So if the government wants to kill nuclear and coal, the #1 and still #2 cheapest fuel sources and “twist your arm” to use more costly gas, solar, and wind, why you happily oblige. Similarly you do every crazy insane safety policy, grossly increase wages and benefits, and stretch out every construction project to make everything as expensive as possible. Utilities don’t have a great safety record but they are experts in pencil whipping and creating massive pointless procedures. This is all because the system naturally encourages them to be as inefficient as possible. Changing to a publicly owned entity is no better. All the not for profits and municipal run utilities are just as bad, if you want cheap power somehow competition has to be introduced. Making generation profitable and allowing customers to choose their generator is one way. By the way, most of Texas used to be powered by Luminant/Texas Utility mostly using lignite in some very clever and low cost systems. They started subsidizing wind and solar which shut down the lignite power plants and the result is huge reliability problems.
