Everyday socialism, American-style, is happening now all across the country

Editor’s note: The City of Vero Beach Utilites and Finance Commissions will meet Aug. 30 to review the terms of the proposed sale of Vero Electric to Florida Power and Light. City Hall watchers expect the Council to approve the terms of the proposed sale when it next meets in September. As Vero Beach prepares to hand over its municipally owned utility for net proceeds of little more than existing cash reserves, the following article on public utilities is worth considering.  This article exploring the benefits of public ownership of utilities was first published in 2013 by truth-out.org.

According to the most recent bills comparisons published by the Florida Municipal Electric Association, FPL’s rate for 1000 kilowatt hours per month is $106.05, allowing for a six percent franchise fee. Vero Electric’s rate is $116.08. Based on current rates, then, Vero Beach residents could expect to save approximately 9 percent on their electric bill, if the deal were to close now. However, FPL will be making a number of rate hikes over the coming years, all of them already approved by the Florida Public Service Commission. Whatever saving Vero Beach residents will see on their electric bills will be somewhat offset by cuts in services and/or tax increases, as the City deals with the loss of $7 million no transferred annually from the Electric Fund to the General Fund.

For a start: It’s often forgotten—or simply not known—that there are more than two thousand publicly owned electric utilities now operating, day by day, week by week, throughout the United States (many in the conservative South). Indeed, 25 percent of US electricity is supplied by locally owned public utilities and co-ops.

Moreover, most of these now conventional “socialist” operations have a demonstrated capacity to provide electricity at lower cost to the consumer, not to mention cheaper and more accessible broadband. (Nationally, on average, customers of private utilities pay 14 percent more than customers of public utilities.)

One obvious reason: Public utilities and co-ops simply don’t pay the same exorbitant executive salaries common in the private sector. They get pretty much the same work done for far less. General managers of the largest class of publicly owned power companies earned an average salary of roughly $260,000 in 2011. Average compensation for CEOs of large investor-owned utilities was $6 million—almost twenty-five times as much.

Also, of course, public utilities and co-op producers don’t have to pay private shareholders any dividends. And they return a portion of their revenues to the city or county to help supplement local budgets, easing the pressure on taxpayers. A recent study found an average transfer of 5.2 percent of revenues to municipalities—compared with average tax payments by private-investor-owned utilities of 3.9 percent.

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2 comments

  1. Just take a look at the United Kingdom. Since privatization the consumers power rates have averaged way above an annual 9% price hike with the latest just announced of 12 1/2% raise due in a couple of months. These are not government owned suppliers. They are private super entities. We are lucky in as much as we (in the US/Florida) do have a little influence through our utilities commission in the amount we are forced to pay, (we have no alternative). However that influence upon the commission will never reflect the users wishes at all, especially as controls of the power supply move into a handful of major utilities. Before long the FPL company will sell out to a larger company, which more than likely will be someway connected with an intercontinental owner. A French or Chinese, or other consortium.
    The British who built one of the first nuclear power stations now have the Chinese and French building the replacements and running it.
    Good old Vero Electric. We shall miss you and we shall regret it, I am sure.

  2. Keith, Good to hear from you! Additionally, Vero Electric has no plans to raise rates in the foreseeable future, while FPL will be raising rates by $2.39 per 1000 kWh on January 1, 2018. That will increase FPL’s rate to $102.44. Add to that the 6% franchise fee, and Vero Beach residents will be paying $108.58 as customers of FPL. With Vero Beach’s rate at $116.08, that means customers using 1000 kWhs or less per month will save $7.50 per month or less by switching to FPL. In exchange for this savings of $90 a year on their electric bill, Vero Beach resident will face higher City taxes and/or cuts in municipal services. (SIXTY-TWO PERCENT OF VERO ELECTRIC’S RESIDENTIAL CUSTOMERS USE 1000 kWhs OR LESS PER MONTH.) Quite simply, this means the majority of Vero Beach residents have very little, if anything, to gain from the sale of Vero Electric. Sadly, a number of local leaders, those now in office and those running for office, know this deal makes no sense for the City and its residents. For political reasons, they cannot bring themselves to speak the truth.

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