The City of Boulder, Colorado has been engaged in battle with private, investor-owned utility Xcel for the past several years. In 2011, the City passed a referendum to form its own municipal electric utility and give utility giant Xcel the boot. Since then, the City has been negotiating with Xcel to give the utility one last chance to shape up or get kicked out.
A recent article in the New York Times discusses the pros and cons of municipal utilities.
"Roughly 70 percent of the nation’s homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, normally through the rates they charge customers. But government-owned utilities, most of them formed 50 to 100 years ago, are nonprofit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on par with government levels, rather than higher corporate rates.
That financial structure can help municipal utilities supply cheaper electricity. According to data from the federal Energy Information Administration, municipal utilities over all offer cheaper residential electricity than private ones — not including electric cooperatives, federal utilities or power marketers — a difference that holds true in 32 of the 48 states where both exist. In addition, they can plow more of their revenue back into maintenance and prevention, which can result in more reliable service and faster restorations after power failures."
Not only have municipal utilities proven themselves more reliable during recent extreme weather events, they're also cheaper. While the private utility mega-corporations have touted their "economies of scale" as more cost effective, that's no longer true. With increasing pressure to turn a profit and pay shareholder dividends every quarter, these corporations are increasingly looking for ways to increase profits and cut expenses. Reliability and service suffers first, instead of cutting exorbitant executive salaries, lobbying budgets, and "corporate stewardship" waste, such as buying naming rights to football stadiums and other ridiculous expenditures. The fundamental problem is that shareholders don't care where the profits come from, as long as they show up every quarter. Company executives are loathe to dip into their ever-increasing perks, so the customers are the ones who take a hit for the team.
When the corporate baggage of multi-million dollar salaries and frivolous executive waste are taken out of the picture, a municipal utility may more than make up for any "economies of scale." Check it out in your local area!
A recent article in the New York Times discusses the pros and cons of municipal utilities.
"Roughly 70 percent of the nation’s homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, normally through the rates they charge customers. But government-owned utilities, most of them formed 50 to 100 years ago, are nonprofit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on par with government levels, rather than higher corporate rates.
That financial structure can help municipal utilities supply cheaper electricity. According to data from the federal Energy Information Administration, municipal utilities over all offer cheaper residential electricity than private ones — not including electric cooperatives, federal utilities or power marketers — a difference that holds true in 32 of the 48 states where both exist. In addition, they can plow more of their revenue back into maintenance and prevention, which can result in more reliable service and faster restorations after power failures."
Not only have municipal utilities proven themselves more reliable during recent extreme weather events, they're also cheaper. While the private utility mega-corporations have touted their "economies of scale" as more cost effective, that's no longer true. With increasing pressure to turn a profit and pay shareholder dividends every quarter, these corporations are increasingly looking for ways to increase profits and cut expenses. Reliability and service suffers first, instead of cutting exorbitant executive salaries, lobbying budgets, and "corporate stewardship" waste, such as buying naming rights to football stadiums and other ridiculous expenditures. The fundamental problem is that shareholders don't care where the profits come from, as long as they show up every quarter. Company executives are loathe to dip into their ever-increasing perks, so the customers are the ones who take a hit for the team.
When the corporate baggage of multi-million dollar salaries and frivolous executive waste are taken out of the picture, a municipal utility may more than make up for any "economies of scale." Check it out in your local area!
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