The reading for today’s class focused on the structure of the energy industry and its present composition. The energy industry mix falls along a spectrum between private and public, with varying degrees of regulation and government (both state and federal) involvement. The reading notes that currently only 9% of the energy industry is comprised of public power sources. As the landscape of the energy industry continues to change with the battle between regulation and deregulation growing due to climate concerns and the vertical integration of many Investor-Owned Utilities(IOU’s) starting to erode, I started to question how well suited the energy industry is to private ownership.
The text noted that Nebraska operates electric systems that cover all of the state, providing public power for all commercial and residential citizens. Why when most other states are offering regulated, in varying degrees, private power has Nebraska elected to operate a public utility?
The Nebraska Power Association (nepower.org) and the Nebraska Public Power District (nppd.com) websites help explain the benefits of publicly owned power systems for the state of Nebraska.
According to these websites, power in Nebraska is currently generated by Uranium, Low-Sulphur Coal, Hydro, Natural Gas, and Diesel plants, with a small but growing amount generated from Wind. Most of the power plants are owned and operated by the state, with a small amount of hydro being generated by private plants that sell exclusively to Nebraska Power.
Nebraska believes that public ownership offers its’ citizens the cheapest form of electricity because 1)it eliminates the profit margin created by shareholder owned private companies and 2) publicly owned power companies are exempt from the taxes placed on private companies. Any revenue generated by Nebraska Power is given back to the state as in-lieu-of taxes and fees, which usually amounts to over 30 million dollars a year going to schools, parks and infrastructure. This creates a net benefit for all of Nebraska citizens, as power costs remain below the national average while taxes to pay for other state funded operations are able to remain much lower than they would be if power was supplied by a private company.
Nebraska Power also creates jobs directly, by employing over 6000 employees, as well as indirectly by attracting businesses that have high electricity demands and wish to take advantage of the states low energy costs.
Nebraska also seems to be well suited to handle the increasing environmental concerns that we face today and into the future. As a state controlled entity Nebraska has the ability to integrate renewable energy sources and set more achievable energy goals by not having to attempt to do so through an uncooperative private 3rd party. Nebraska Power also provides Nebraskans with a reliable flow of energy that avoids the risks, such as blackouts or intentional tampering seen by Enron in California, which can be associated with for-profit power generation.
Admittedly, public power may not work for every state and to attempt to implement it now, after private companies have become so established may be impractical. However, as states deal with the challenges currently facing the power industry and the changes that appear to be coming as companies find ways to deal with the costs associated in reaching renewable energy targets, at least some public control may provide solutions.
Nebraska seems to be well-suited both now and in the future to meet these challenges while maintaining stable relatively low cost energy to its citizens.
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