Power to the People: Does Ownership Type Influence Electricity Service?

After storm-related power outages, many have recommended municipalizing investor-owned utilities, claiming that profit-making utilities have insufficient incentive to prepare for storms. I provide empirical evidence that municipal utilities spend more on maintenance of their distribution network tha...

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Bibliographic Details
Published in:The Journal of law & economics 2016-05, Vol.59 (2), p.441-476
Main Author: Boylan, Richard T.
Format: Article
Language:English
Subjects:
Business ownership
Electric utilities
Repair & maintenance
Storm damage
Storms
Studies
United States
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Summary:After storm-related power outages, many have recommended municipalizing investor-owned utilities, claiming that profit-making utilities have insufficient incentive to prepare for storms. I provide empirical evidence that municipal utilities spend more on maintenance of their distribution network than investor-owned utilities. Nonetheless, I find that storms significantly disrupt electricity consumption in areas served by municipal utilities but do not disrupt areas served by investor-owned utilities. These results are based on a stratified random sample of 241 investor-owned, 96 cooperative, and 94 municipal utilities in the United States between 1999 and 2012. I conclude that municipal utilities’ inefficiencies are more important in causing power outages than investor-owned utilities’ disincentives to spend on maintenance.
ISSN:0022-2186
1537-5285
DOI:10.1086/687755