Won't a new city utility be able to buy electricity at the same prices the investor-owned utility pays?
It is unlikely that a new city utility would be able to buy electricity at the same price the investor-owned utility pays for electricity. Private utilities gets most of their electricity from existing low-cost generating stations. This electricity is available at a much lower price than electricity sold in the open market. Because of its low-cost generation resources, private utilities do not need to purchase much electricity in the open market. Private utilities have some long-term contracts with outside providers for a small portion of its overall load. It addition, it has trading capabilities to buy and sell power when needed for peaking conditions, which is a very complex and risky business requiring great expertise and hedging abilities, which a typical city lacks. Private utilities can buy supplemental power at low rates because it has many transmission connections and itself owns a diverse mixture of generating plants. A typical city lacks these cost management resources and would be more subject to volatile market prices.
