because as part of their legal monopolies they are only allowed to charge a "reasonable" usage fee.

ETA: utility companies make profit on capex, not opex

rayiner 10 hours ago | parent | next [-]

That's mostly incorrect. In Maryland, like in most places in the country, the distribution infrastructure is controlled by regulated monopolies that buy power on the market from generators. Your bills separate out the fees for usage and the fees for distribution, and the Maryland PSC has to approve both.

	▲	fooqux 8 hours ago \| parent [-]
		Yes, but the cost per kilowatt is at least partially based on capex recovery. That might be approved by the PSC but what they approve are capex projects and the recovery of them.

▲

claw-el 10 hours ago | parent | prev | next [-]

Only allowed to charge “reasonable” usage fee means no other non-usage fee allowed or it is purposely designed to allow other kinds of fees?

▲

Avshalom 10 hours ago | parent [-]

https://www.nrdc.org/bio/jc-kibbey/utility-accountability-10... To be clear this only about some utility companies.

▲

claw-el 9 hours ago | parent [-]

Thank you for sharing this. I get that the company making the capital investment wants to get a return of 10% from their investment. The part I don’t understand is, why aren’t the return on investment being covered by the increased usage from the data centers (while the rate per usage stays flat)?

If the increase in usage (with rates staying flat) is insufficient to cover for the return on investment, then who is making the decision to take the risk for making these capital investment? The risk taker can definitely ‘pay’ for an over confidence in the market.

If it is because the increased usage of the grid as a whole reaches a step function requiring more investment, the system can have a gradually increasing usage price rate.

I am trying to find out if someone in the system is trying to eat up the benefits and publicly say “it’s because of AI” or maybe I am not understanding the situation well.

	▲	turlockmike 8 hours ago \| parent \| next [-]
		It's because it's a weird mix of subsidies, price controls, regulations and bureaucracy that has completely distorted the market incentives.
	▲	brianwawok 8 hours ago \| parent \| prev [-]
		Two things I’d think 1) the first MW is cheaper to generate than the 100th. Newer plants. Cheaper fuels. More efficient. You run your good stuff always, for peak it’s on demand. 2) the cost of the old plants are already paid for, if adding a new data center requires a new plant; may add a big cost with a 50 year payback.

▲

morkalork 10 hours ago | parent | prev [-]

Perhaps utilities should be state owned where any profits are used to offset the tax load on the citizens..

▲

GorbachevyChase 4 hours ago | parent | next [-]

They basically are. It really isn’t anything resembling an open market. They are effectively extensions of the state that happen to be funded by user fees rather than general funds.

▲

fooqux 8 hours ago | parent | prev [-]

Because there's this belief that a for-profit company will naturally be more efficient. No idea if that's actually true in practice though. Or if efficiency > the profits the company takes.

I don't know of any large community ran utilities, just small ones. I'm guessing the scale starts being a problem eventually.

▲

fyrn_ 8 hours ago | parent | next [-]

They can be efficient, but I ly if the incentives align towards the desired definition of efficiency. If you give a company a natural monopoly and protection from competition. Then it's most efficient way to make money is just to raise rates

▲

AlotOfReading 7 hours ago | parent | prev [-]

TVA and the NY power authority are genuinely massive, government run utilities. Both are also known for pretty low power bills.

	▲	fooqux 6 hours ago \| parent [-]
		Nice! I didn't know about those. Although it's hard to directly compare rates since cost can be so geographically dependant.