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[quote user="schlimm"] REA on this thread refers to the New Deal's Rural Electrification Administration, which, through loans to local co-ops, allowed America's farmers to get the electricity that private electric utilities refused to provide them because of lack of profitability.  In 1934 only 11% of farms had electricity; by 1942 almost 50% did.  Another good example of how society can solve some problems that were beyond the reach of capitalism. <div style="clear:both;"></div> [/quote] The REA helped bring electric power to some rural communities quicker than they would have gotten it had they waited until the investor owned electric utilities provided the power.  Most REA utilities, known as co-ops, are located in the mid-west and southeast.  They were built with low cost government financing, i.e. tax free bonds.  In addition, in most instances, they pay no income taxes, property taxes, etc. Nevertheless, they are expected to recover their costs from their rate payers.  Again, the operative words are recover costs from the rate payers or users. Public electric utilities are the other form of public ownership.  These utilities are owned usually by a city or municipality, whereas a co-op is owned by the customers.  The largest public owned electric utility in the United States is owned by Los Angeles, followed closely by one owned by San Antonio. Most of the rural areas in the United States, contrary to popular belief, were wired by investor owned electric utilities and get their power from these utilities.  In those states with enlightened regulators the utilities were allowed to charge sufficient revenues in the cities to have the resources to extend the power lines out to the folks on the farm.  Texas Power & Light Company, Texas Electric Service Company, West Texas Utilities, Southwest Electric Utilities, El Paso Electric, are examples of investor owned electric utilities that extend service to rural customers.   Approximately 85 per cent of Americans get their juice from investor owned electric utilities.  And more than 90 per cent of the power is generated by these utilities.  These companies pay income, property, excise and franchise taxes, whereas their public and co-op counterparts pay none of these taxes, although they usually collect a ghost franchise tax.   In Texas, where competition in the electric utility market is robust, the investor owned electric utilities trounce the public utilities.  For example, in Georgetown, where I live and where the local utility is owned by the city, the residential rate is 10.56 cents per kWh.  In San Antonio, which owns the local electric utility, the residential rate is 11.2 cents per kWh.  In Austin, again where the utility is owned by the city, the rate is 8.7 cents per kWh.  In Dallas, Houston, El Paso, etc, where competition has been introduced, customers can shop for their electric energy.  As a result, they can find rates as low as 8.7 cents per kWh or better from more than 30 retailers.  Why is the Austin rate so low?  Because the utility is losing money and is on the verge of a significant rate increase. Another point that is frequently overlooked is that most public utilities, as well as co-ops, depend on investor owned electric utilities for a substantial percentage of their power and transmission capabilities.  Austin, for example, buys approximately 35 per cent of its power from investor owned utilities.  The same is true for San Antonio.  Georgetown depends on Oncor, which is part of Energy Future Holdings, for its transmission ties.   Numerous studies have shown that investor owned electric utilities, especially where competition is permitted, are simply more efficient and effective than public utilities. Government simply does a lousy job of running commercial enterprises. I don't believe government should run any commercial activity that can be hoisted by competitive businesses in a well regulated market place.
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