Power companies fight Maine’s proposed non-profit utility

It starts out as essentially the amount spent to "buy the goodwill" of the owners and convince them to sell, not an estimate of how much the intangible assets are actually worth. That's the first concrete number usable for GAAP.

Afterwards, companies have to annually test goodwill for "impairment" and write down the value of its goodwill if it's impaired.

Obviously the futher you get away from "my business is a factory that I own, my cash reserves, and a pile of materials that I can turn into product" and more into "my business is the smarts of a bunch of people who can leave with two weeks notice, a bunch of contracts that can be severed with 90 days notice, and an API that people love so much they don't want to go elsewhere" it gets very difficult to justify.

If you buy Coca-Cola Corporation you get tangible assets like the manufacturing plants and work in progress which can be valued fairly simply. But you also buy the Coca-Cola brand, which is intangible and difficult to value.

And yet it obviously has value - nobody thinks the value of Coca-Cola is entirely in its bottling plants.

So we just kinda say, "I guess it's worth what you just paid for it" and put it in the accounts as the difference between the purchase price and the value of the assets that can be valued.

My assumption is that I'm not understanding something important about it, but I can't figure out what that is from the explanations in these comments.

Natural monopoly means there is no (or at least insufficient) competition. So either you get accountability by having it be publicly-run, or you end up with very little accountability at all.

> Why can't we let private companies do whatever we were going to let the public one do?

Private companies are very good at coming up with things you never thought of in order to make a profit - that's the whole reason private industry can be more efficient than public ones in the first place. But when most of the creative things they could come up with would be profiting at the expense of the public (because in a monopoly position there's essentially no incentive to treat consumers well), the profit motive does more harm than good and it's better to take it out of the picture.

> Frankly rather than the hack of setting up a public utility I'd perfer straight up price controls, no reason to build out alternative infrastructure at taxpayer expense, but there might be a quicker fix with some modifications to a few regulations.

That's how you get loopholes that then get exploited worse than the problem you were originally trying to fix.

The lack of need to make a profit for one thing

EU is a good case study. Countries which abandoned price controls but instead have a single (usually state owned) company which controls the grid and a bunch of companies which sell power to consumers (effectively renting the grid) tend to have lower prices than those that didn’t.

e.g. I can get a plan which is:

Wholesale hourly market price + €0.08 fee to the grid company + €0.02 to the power company.

The first is that barrier to entry for power companies is that they're enormously expensive to set up - they're huge up-front capital costs with extremely low per-unit costs. This is, as several others have pointed out, the textbook scenario for natural monopolies, in which left to its own course, one company will capture the entire market.

The second is that typically the reason a power company is then granted an explicit monopoly is because there's a social need to deliver power to places that are more expensive to provide to than the civic center, and usually the monopoly is provided with stipulations that the company must deliver power to these areas. This is for two reasons - the first is otherwise nobody, no matter how much competition is in the market, is going to deliver power to those areas, because it's fundamentally uneconomical, and the second is that the company that does try to provide power to those areas will be undercut by the company that isn't. A chartered monopoly in this case is to work around the fact that the market _does not work_ for provisioning these goods - left to its own devices, the market would not provide power to many distant rural areas.

The basic conflict here is between a social good with diffuse benefits - electrification in rural areas is generally considered a net positive for productivity, health, society, etc., and pride of place, but it's deeply uneconomical on a unit basis, and so the market solution does not deliver here.

Sometimes the math says the market's the best choice, sometimes it does not. For large-scale provision of high capital cost goods across a geographically distributed area of variable population density, the math says the market doesn't work out.

You're just proposing a set of rules that's more favorable for a particular outcome.

There's strong evidence when it was tried, just in the last 25 years in real estate, electricity, water, cryptocurrency, precious metals, supplements, and startups that those sets of rules lead to fraud and abuse.

That's why the "regulations" exist - they're laws to prevent crimes that went in because lots of that crime happened.

I personally made good money in those bubbles but most people got wrecked. Encouraging more of them doesn't lead to a healthy stable society.

There's wild examples before baseline regulations in the late 1800s of people selling the same lot of property dozens of times (when you can only sell it once) and people finding out the seller never even owned the property to begin with.

These frauds were super common before government regulation and people are still doing it in international markets. For instance, the airport that never existed https://en.m.wikipedia.org/wiki/Emmanuel_Nwude

But in reality, public utilities should be owned by the gov't. Otherwise... Enron. Or the aforementioned Texas "free market" debacle.

Then with the distributors who actually sell to the public: the service they are providing here is really dubious. Ultimately they are just buying power at wholesale prices and reselling it to the public at some average price + markup. What can they actually do to increase customer service? They are essentially just a middleman. At least where I live it effectively makes no difference which one you go with, some might temporarily have better rates but they inevitably need to get back in line with everyone else or go bankrupt.

The largest energy conglomerate in the US is basically that. The distribution and generation companies are 50 feet from each other because they used to be the same company. (They might work out of the same building too, I forget) But of course the state doesn't own the infrastructure (hey, this is the USA!).

The history of our energy market is like that of 10 countries combined. Texas by itself is a weird case study, as deregulating its market (Texas has its own power grid, because... Texas...) shot prices seven times higher, though they eventually stabilized again. Deregulation by itself isn't going to fix things, but more public ownership probably would, as the incentives would be towards stability, safety and stable prices, combined with increased funding toward sustainable energy.

If the utility underestimated the cost of providing service, they'll petition the PUC to raise rates, so if they overestimated the cost of providing service, why shouldn't they give it back rather than treating it as a windfall to be distributed to investors?

I'm fine with a public utility getting a reasonable regulated profit, but if they collect more money than they needed to cover expenses, it should go back to the ratepayers. Otherwise the company is just being rewarded for overestimating expenses.

Even of the things listed above, their being a basic right doesn't preclude someone buying them. I pay for electricity like almost everyone else.here, but it won't be taken away from me even if I do not pay (though it's not worth the hassle unless I have really cannot afford to pay).

But you act as though adding any features to our society and economy that move toward taking better care of all our people would somehow ruin the whole thing.

Now, to answer your initial question:

Provide governmental support for small businesses during the transition—local grocery stores, small family farms; not the ones already making hundreds of millions+ in profit every year. A lot of this support wouldn't even need to be monetary—remember, this isn't even talking about making food free or anything; it's just talking about moving to a non-profit model. The most obvious type of assistance is legal (to understand what being a non-profit means and how to legally go about making those changes) and accounting (to understand what this will mean for their books).

I don't believe that massive chain supermarkets and agribusiness conglomerates should get much in the way of financial support for this kind of change—they've already been making huge amounts of money for their execs and shareholders. And, again, only one of those groups actually has to stop making money off this. While I would 100% support separate measures to reduce the exec pay disparity, that's out of scope for this particular discussion. Going non-profit just means you don't have shareholders who get to make money off the business—and, vitally, you don't have shareholders pushing the business to make more profit at the expense of pricing people out of staples or reducing the quality of the food.

I think calling it "inefficiency" whitewashes the real problem. That "inefficiency" leads to a much higher rate of unnecessary deaths and adverse health outcomes in the US than nearly every other advanced nation.

And often, even if you can get good health care, the financial consequences are devastating. Even if you have insurance.