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If a city forms a government utility, can it later turn back to the investor-owned utility?
The existing utilities value their customers and would always be willing to resume service to customers in the city. But city residents need to understand the expenses they would incur that they could not recover if the city returns to an investor-owned franchise. First, forming a government utility requires a multi-million dollar investment by the city to by the system's physical plant, which involves expensive long-term debt. Additional expenses include consultants, legal fees, regulatory proceedings, a new labor force, ongoing operating and maintenance costs, future capital expenditures and the legal mandate to replace property taxes. Then, the courts may well require the city to reimburse the private utility for its cost to reintegrate its system after losing city customers. The court also may require a city payment for the private utility's "stranded costs" in generation it built under legislative encouragement and the assumption its customer base would include this city. That's a lot of taxpayer money to throw away only to return to where you started. |
