Why Publitize? Prospects for Undoing Investor-Ownership of Electric Utilities

01 May 2019
Dr. Jeff D. Makholm

In an article in the May 2019 issue of the Wiley journal Natural Gas & Electricity, NERA Managing Director Dr. Jeff D. Makholm reviews the economic history of privatization in the UK from 1979 to 1992 and in the US a century and a half earlier. With consideration of these unique histories in mind, Dr. Makholm analyzes recent calls to “publitize” investor-owned utilities in American cities in the era of climate change.

For the government of Prime Minister Margaret Thatcher, privatization emerged as an attractive solution to fiscal strains during an economically unstable time. By the 1990s, privatization became one of the more important global economic developments as governments attempted to improve utility services and end the drain on public funds.

During the 1839–1842 depression, New York taxpayers were left footing the bill for the Eerie Canal when toll revenues dropped with the decline of trade. Speculators would soon seek funding for large infrastructure projects from private investors. Subsequently, a report published in the 1910s studied publicly and investor-owned US and UK utilities and recommended against public ownership, helping to shape the future of investor-owned utilities in the US and leading to the Stradivarian US model of energy regulation.

Dr. Makholm cites recent calls to publitize utilities in Boulder, CO; Santa Fe, NM; and San Francisco, CA, and, considering these economic histories, assesses whether this option is a suitable remedy for regulatory problems arising from demands to address climate change.

Makholm, Jeff D. (2019, May). “Why Publitize? Prospects for Undoing Investor-Ownership of Electric Utilities,” 35/10, ©2019 Wiley Periodicals, Inc., a Wiley company.