Why Connecticut won’t get a ‘public’ electric system

With Connecticut facing another big increase in electricity rates, this one caused entirely by state government policy, a reader asks:

Why can’t Connecticut replace its current power companies with a consumer-run co-operative organization like those that seem to work well in other parts of our country?

Government or “public” ownership of electric utilities isn’t a wild idea. Government-owned electric utilities serve about 15% of U.S. residents, and six municipalities in Connecticut operate their own electric utilities, though they generate little power themselves and get most of their power from producers elsewhere.

Any jurisdiction starting from scratch might want to consider government ownership.

But Connecticut didn’t start its electrical system that way. The state started with a privately owned and then government-regulated system. Indeed, a century ago the state’s main electrical utility often seemed to be regulating state government, and not the other way around. Back then the Republican political boss of Connecticut, J. Henry Roraback, also ran the biggest electric utility, Connecticut Light & Power Co., as well as another regulated utility, the New Haven Railroad.

Such domination of government by corporations is no longer accepted in Connecticut. Instead Connecticut today lets its government be dominated by the government employee unions.

Whether government-owned utilities can provide electricity less expensively over the long term is the critical question. Connecticut’s municipally owned utilities claim to provide power cheaper but they don’t have the expensive regional system maintenance responsibilities of the state’s two major electric utilities, Eversource and United Illuminating, the latter a subsidiary of energy giant Avangrid. The municipally owned utilities are also exempt from most of the “public benefits” charges state government requires Eversource and UI to hide in their bills to customers.

Quite apart from that, there are reasons to doubt that a government takeover of the electricity business in Connecticut would save much money for customers.

First, state government would have to come up with a huge amount of money, probably more than $15 billion, to purchase the Connecticut-based assets of Eversource and UI.

Then there would be the costs of separating Eversource’s Connecticut assets from its out-of-state assets and UI’s assets from the rest of the Avangrid network. State government would have to assume those costs too.

Then there would be the staffing issues. Presumably most Eversource and UI employees in Connecticut would become unionized state government employees gaining coverage by state government labor contracts, with their wages, pensions, insurance and seniority rights from the utility companies being preserved or improved. Employed by state government, the former Eversource and UI workers might be more expensive. For starters, they’d probably get more discretionary paid holidays, some of which they would be expected to use by working in Democratic political campaigns.

With private stockholders out of the way, a government-owned electric utility would not have to pay dividends. But that savings likely would be wiped out by the interest due on the billions borrowed by state government to purchase the Eversource and UI systems.

Also with private stockholders out of the way, there would be little resistance to state government’s use of the electric company for political patronage and to camouflage even more government costs than state government already hides in Eversource and UI bills.

Up to this point politicians might love the idea of state ownership of Connecticut’s biggest electric utility.

But then the governor and state legislators would have to take direct responsibility for running the electric system on a day-to-day basis. Every service outage and natural disaster would be seen not as a failure of the big, bad privately owned electric company but as a failure of state government, with no scapegoat available to elected officials.

Nobody in Connecticut cares much about the longstanding failures of public education, criminal justice, child protection, poverty and urban policy, and such. But everybody cares when the power goes out. Are the governor and state legislators running the government so well that they’re ready to take on responsibility for the electricity system too?

Not a chance, no matter how much money might be saved.