Electric Pipedream

A government takeover of New York’s power grid would be a recipe for disaster.

Ike Brannon September 1, 2020 

During Tropical Storm Isaias last month, more than 2 million households in the New York metro area lost power. Most got their power back on within a day, but 10,000 households went without power for over a week. Complaints about the slow return of service have led elected officials to call for investigations.

In New York City, the perceived tardiness of the response has served as a pretext for proposing a radical solution. Advocates on the left propose a government takeover of the energy grid, a process referred to as municipalization. New York City public advocate Jumaane Williams released a report recommending this step the day after Isaias dissipated, explaining why the city should add oversight of a complex electrical grid to the list of complicated systems it already mismanages.

Municipalization is a bad idea. It is predicated on the notion that utilities want to cut corners in order to create a profit for their shareholders, and that government, with no shareholders, would be immune to such pressures. Only government, with no profit motive, would thus have incentives to do the job properly and efficiently. Cost savings would be passed along to ratepayers.

The reality is quite different. 

Democratic Socialists may spurn the profit motive, but it motivates people to do their job. A utility that underperforms can fire its chief executive and anyone else who messes up—or it can reward them for doing a good job. When utility workers become government employees, however, they invariably get the government protections that go along with that. It becomes much harder to reward good performance or punish poor performance.........To Read More....