Utilities, Capitalism, and Socialism

There have been several institutional ads regarding Florida Power and Light's response to Hurricane Irma.  One ad connects a veteran and the folks reconnecting folks to the grid after the hurricane. It's a good ad.  Mostly we take stuff or granted when it comes to utilities like electricity, water, and sewer services.  The economic theory is that a monopoly is granted to cover the cost of the infrastructure, the cost of generating the power and others expenses and a rate of return after expenses are paid.  Sometimes the government itself runs the utility.  In either case the rates charged are publicly determined and reviewed.  And as it goes the devil is always in the details.

I will tend to give them the benefit of the doubt.  I don't know what assumptions they made regarding all the variables related to storm damage, repairs required, staffing available and or materials available.  The alternatives for their customers are bad.  Some can afford their own generators and others can't.  Locally a nursing home lost fourteen patients because of the power outage.  It has been estimated that monthly bills will go up about $5.00 per month to pay for the restoration of power from Irma.

The people get electricity or water according to how much they use, the company gets paid, and the investors get dividends.

Most of the time the process works except for disruptions which can come from anywhere.