Capitalism Debates Socialism in Honolulu

Deck: 

Hawaii Considering Alternatives to Private Sector Ownership

Fortnightly Magazine - December 2016
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The State of Hawaii has launched an inquiry that could lead to the biggest takeover of an investor-owned utility since New York State bailed out the Long Island Lighting Company in 1998. Hawaii just reopened a more than century-old debate about whether the private or public sector should provide electricity to its citizens.

Lawmakers in Hawaii are really asking three interconnected questions. Do we need stockholders or shareholders to finance our electric utility? Are we comfortable with private sector management setting goals for the local electricity business?

If the electric business is run publicly as a not-for-profit, how will we set rates? There will be no need for a state public utility commission to set a return on equity. The new public entity won’t have any equity.

Some states defer to the primacy of local political control. Others regulate municipally-owned entities as if they are privately-owned.

In our view, the chief distinction between public and private electric utility systems is how they finance their assets. Other than that, electric utility assets are pretty much the same in terms of power generation, transmission and distribution. Same business.

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