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 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’ in-efficiencies are more important in causing power outages than investor-owned utilities’ disincentives to spend on maintenance.
Boylan, Richard T.
"Power to the People: Does Ownership Type Influence Electricity Service?,"
Journal of Law and Economics: Vol. 59:
2, Article 7.
Available at: https://chicagounbound.uchicago.edu/jle/vol59/iss2/7