Here in NJ a lot of people are complaining about electricity price increases. Upon looking into it, it seems that the reason is mostly a combination of population growth, shutting down old power plants, and not building enough new power plants.

Most people seem to blame price gouging from the electricity companies, but the electricity companies seem to be extremely tightly regulated and don't have much wiggle room with how they set their prices.

Haven't heard much talk about actually solving the problem and building more power plants, so probably we're going to see more articles like this in the future.

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os2warpman 4 days ago | parent | next [-]

>Most people seem to blame price gouging from the electricity companies,

True or false: PSEG's annual profit every year for the last five years at a rate that greatly exceeds inflation while expenses are practically flat.

Their stock symbol is PEG, bee-tee-dubs.

There are very few theories of business and/or economics where profits increase while costs are steady where prices don't increase.

Are they (hold on a sec while I compose myself so I don't type a long string of obscenities) using that money to improve their service and keep rates steady or are they funneling everyone's money into the pockets of their investors and begging the state for free cash to maintain their infrastructure like they're some broke-ass bitches?

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streptomycin 3 days ago | parent | next [-]

https://www.alphaquery.com/stock/PEG/fundamentals/annual/pro... does not look like the profit margin has increased over the past 5 years.

Also their stock underperformed the S&P 500 over the past 5 years.

I'm not really a finance guy so probably I'm looking at it wrong, but that seems like some pretty bad price gouging.

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cco 3 days ago | parent | next [-]

>...does not look like the profit margin has increased over the past 5 years.

Just tripled over the last 20 years from 6% to 18%?

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delfinom 3 days ago | parent | prev [-]

Only morons accuse NJ/NY utilities of price gouging. Both states heavily regulate their utilities. Utilities may get large rate increases approved, but it's after they submit substantial evidence of their finances for the next year. The profit margins are basically state controlled.

	▲	ethbr1 3 days ago \| parent [-]
		Regulatory control of margins just incentivizes companies to find loopholes. Look at all the bullshit that passes for business as usual with Florida utilities -- political campaign donations, self-dealing, constructed overbilling by related subsidiaries, etc.

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eddythompson80 3 days ago | parent | prev | next [-]

Are you referring to PEG stock price or actual profit? Because their profits growth hasn’t really “greatly exceeded” inflation. Here is the last 30 years of profits[1] (you can change it to YoY to see how much their growth over the last 5 years is). They in fact posted a loss in 2021 and under performed 2022. They shot up in 2023 and then down to pre-pandemic levels in 2024.

They are not what I’d call a profitable company. I think their stock is reflecting the AI bubble as plenty of people are speculating on power companies

[1] https://www.roic.ai/quote/PEG/financials

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AnthonyMouse 3 days ago | parent | prev | next [-]

> There are very few theories of business and/or economics where profits increase while costs are steady where prices don't increase.

There is a very specific and relevant one: The one in which supply is inelastic. In other words, the one in which it's hard to build new power plants.

When that happens, the cost of operating existing power plants hasn't changed, but demand goes up. In normal economics, demand going up causes the price (and therefore profit) to go up, which in turn attracts more suppliers that increase supply and mitigate the amount the price can increase.

If the supply can't go up then price does. That's econ 101 and it's happening just as it's expected to -- it's simply what happens if you make it hard to increase supply.

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theLegionWithin 2 days ago | parent | prev [-]

2nd one, the investors. barely exceeding inflation is barely making a profit.

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SoftTalker 4 days ago | parent | prev | next [-]

Yeah public utilities can rarely price gouge. They have to get government approval for their rates.

If "AI Datacenters" are part of the problem the answer is simple, charge them higer rates, high enough to motivate them to build their own generating capacity.

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mike_d 3 days ago | parent [-]

> They have to get government approval for their rates.

We need laws that prevent government employees from directly or indirectly investing in utilities.

The California Public Employees' Retirement System for example directly holds over 6.4 million shares of PG&E, and an additional 52 million shares via intermediaries.

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nl 3 days ago | parent [-]

> We need laws that prevent government employees from directly or indirectly investing in utilities.

> The California Public Employees' Retirement System for example directly holds over 6.4 million shares of PG&E, and an additional 52 million shares via intermediaries.

This seems.... good?

Put it like this - would you prefer public employee's retirement scheme did Nnot hold shares in it?

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mike_d 3 days ago | parent | next [-]

> Put it like this - would you prefer public employee's retirement scheme did Nnot hold shares in it?

Yes? Regulators should not financially benefit from doing or not doing their job.

	▲	ethbr1 3 days ago \| parent [-]
		Also, other government employees who work with (and sometimes over) regulators. It's a clear conflict of interest, in the same way post-regulator industry employment is.

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rkomorn 3 days ago | parent | prev [-]

I'm guessing the argument would be whether that gives PG&E the right incentives or oversight.

I don't think it would seem good If the government were inclined to favor PG&E over consumers because "it's better for government employees", for example.

	▲	3 days ago \| parent [-]
		[deleted]

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MangoToupe 3 days ago | parent | prev | next [-]

> but the electricity companies seem to be extremely tightly regulated and don't have much wiggle room with how they set their prices.

Sure they do; the wiggle room is referred to as profit

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42lux 4 days ago | parent | prev [-]

I wonder who could built and operate these plants...

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supertrope 4 days ago | parent | next [-]

The electric company that sends you a bill handles distribution (power lines within your city) not generation (power plants). Sometimes they are vertically integrated owning both generation and distribution. In de-regulated supplier choice states you can switch your generation provider. You cannot switch your distribution provider as each address only has one power line.

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gosub100 4 days ago | parent | prev [-]

Definitely not the government, given how wasteful and inefficient they are.

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42lux 4 days ago | parent [-]

I thought about the providers that are closing down power plants right now. But just out of interest who exactly is the "government" in arguments like this? Because no matter which party is controlling the government the sentiment never seems to change... always seemed like an of remark with no meaning besides yelling at clouds.

	▲	ThrowMeAway1618 3 days ago \| parent [-]
		>Because no matter which party is controlling the government the sentiment never seems to change... always seemed like an of remark with no meaning besides yelling at clouds. There are certain folks who, regardless of the issue, never fail to roll up their metaphorical newspaper, brandish it and hiss, "Gub'mint bad! Bad gub'mint!". It's almost pavlovian. While some of those folks are likely sociopathic ancaps[0], the vast majority are just willfully ignorant people whose marionette strings are being pulled by the cynical scumbags intent on enriching themselves and the rest of the world be damned! And more's the pity. [0] https://en.wikipedia.org/wiki/Anarcho-capitalism