Government Takeovers of Local Power Companies Pose New Risks, Costs for Hotels

By Steve Kiesner Director of National Accounts, Edison Electric Institute | October 28, 2008

When uncertainty develops in the nation's power industry, and it certainly has these past few years, the prospect of the local government taking over the power company is sometimes raised. Takeover proponents promise lower prices and greater reliability, questioning the local electric company's ability to deliver what hotels and other customers expect-a reliable and affordable electricity supply.

But government takeovers aren't the answer. In the end, government takeovers of the local power company bring with them new risks and potential costs for hotel executives and all electricity customers.

To assure your hotel of a competitively priced power supply that is there when you need it, we need a national approach that includes three elements:

Government Takeovers Pose Risks, New Costs

Besides Las Vegas, ballots in a number of other communities looked at whether or not the local government should take over the power company. The results were mixed. In Florida, the towns of Casselberry and Longwood saw candidates who support municipal efforts win four of five races. San Francisco voters rejected an effort to acquire the local power grid. In Montana, voters defeated by a two-to-one margin a referendum that would have allowed the state to buy 13 hydro dams. And in early December, the city council of Corona, California decided to condemn the assets of the local power provider so that it could begin distributing electricity within the city limits.

What government takeover proponents didn't mention in these referendums was that many factors affect the price of electricity. Government control-of and by itself-will have no bearing on the price of power.

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