Why Public Power
Frequently Asked Questions
-
Why pursue Public Power?
The fight for public ownership of energy is not new to New York or the United States. In 1931, the state legislature created the New York Power Authority (NYPA) as a counterweight to private utilities like ConEd. And without the federal government stepping in to create publicly-owned or cooperative utilities, most of rural America may still be without power. Today, cities like Los Angeles and Austin get their energy from publicly-owned utilities.
The conflict between profit and public interest has always lied at the root of the multiple crises facing for-profit utilities, and Central Hudson is no exception.
-
Why not just fix the Public Service Commission?
When utilities like Central Hudson file for rate increases, they submit various reasons as to why they need to increase their revenues. When reviewing these needs, the Public Service Commission (PSC) is obligated to protect the company’s economic viability, given that it must make profits to survive. First, it is understood that if Central Hudson doesn’t earn enough dividends for Fortis shareholders, its standing as a business is compromised. Second, it is understood that if Central Hudson doesn’t raise a certain amount of revenues, its “financial integrity,” or borrowing capacity, is compromised, which means the rates will have to go even higher to make up for higher interest rates.
While several improvements can be made to the PSC, including who gets to appoint the commissioners, having to protect profits is the primary conflict that cannot be addressed as long as the need for profit exists.
-
Why is Central Hudson allowed to be a monopoly?
In the early 1900s, the private energy utility industry fought to be considered a natural monopoly. A natural monopoly is an industry where the fixed costs of operation is so high that competition between different companies in the same market would increase rather than decrease the costs for customers. For example, if two or more companies ran multiple copies of gas pipes and electricity wires on the same streets, not only would it be physically cumbersome, but the total of costs of running multiple systems would have to be divided among a fixed number of customers—meaning each customer would have to pay higher, not lower. In New York, only the energy developers, not distributors like Central Hudson, are allowed to compete against each other, because the supply side is not considered a natural monopoly.
However, if the distribution of energy is a natural monopoly, then it should not be allowed to be privately-owned and for-profit.
-
How can HVPA survive without profits?
Unlike Central Hudson that must make profits to lure shareholders and to maintain its financial integrity so that it can continuously borrow money, being a state corporation with no profit motive means the Hudson Valley Power Authority can charge customers just the cost of running the operation. Being state-owned also means its financial integrity will be more stable, allowing it to borrow money more easily. The New York Power Authority is an example of a state corporation that maintains high bond ratings. Good financial health means continued access to lower interest rates that result in savings for the ratepayers.
Pick a topic for more answers:
Got a question we haven't answered? Submit it here.