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[quote user="Paul Milenkovic"][quote] Your analysis, however, missed an important point.  The utility is not required to provide service to customers who will not pay the full cost for it.  If they default on payment for the service, they are disconnected.  And they are not reconnected until they pay up, including a disconnect and reconnect fee. [/quote]I fully agree that a customer who fails to honor a contractual agreement to pay for the service can and should get cut off.  But what the customer has to pay has traditionally been determined by regulation, and any given customer paying that rate may or may not be paying for the full cost of that service by whatever economic or accounting formulas may be applied to the situation.  An example of this are "lifeline" rates where regulation mandates low connection charges for low-usage customers.  I am arguing that the terms of the formation of Amtrak has Amtrak paying "lifeline" rates to the host railroads for trackage rights, rates that provide very little in the way of incentive for priority service on a post-Staggers act capacity-constrained rail network.[/quote]When I began my career in the electric utility industry in Texas, rates were set by the cities.  Subsequently, with the formation of the Public Utility Commission in the late 70s, if I remember correctly, the rate making process defaulted to the PUC.  Until 2002 rates in Texas were set by the PUC upon presentation of a rate case by the utility seeking a rate adjustment.  Beginning in 2002, for the most part, only the rates associated with the poles and wires are set by the PUC.  The other components of the electric rates, e.g. power generation, customer service, etc. are set by the market place.Preferential rates were the name of the game when I started to play it.  The rates for residential customers were subsidized by commerical and industrial customers.  But over the years the PUC agreed that each class of customer should pay the full cost for his or her service.  Today there are few if any preferential rates in Texas, and this model seems to be gaining favor in many other parts of the country.Giving residential customers lower rates than the cost of service drove an number of unintended consequences.  People used more electricity than would have been the case if they had been required to tote the full note from the beginning.  One result was that they consumed more resources and created more pollution.  It is a classic example of how subsidies distort market behavior.  It is why I am against price subsidies for a commercial activity, including passenger rail.
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