Delays Restoring Power After Hurricane Sandy

There were a lot of delays restoring power after hurricane Sandy.  A lot of people still don’t have electricity.  People are complaining about delays and bureaucratic overhead.

Those arguments miss the real point.  The energy corporation has a monopoly.  It makes no difference if they do a great job, or a barely competent job.

When there is a power outage, the electricity monopoly’s only cost is lost revenue.  They don’t bill for the time you have no service.  There is no penalty for delays restoring service, other than politicians starting to get angry.

Under normal circumstances, only a small number of repair crews are needed.  Hiring and training extra repair crews costs money.  They maximize monopoly profits by having a shortage of repair crews during a emergency.

2 Responses to Delays Restoring Power After Hurricane Sandy

  1. FSK, I have to disagree with this post of yours. Sometimes I think of becoming energy independent.This is technically feasible but not economically – payback period is very long considering current electricity prices. Electricity prices are way lower than they could have been. Electrical mafia is not that bad in comparison to other mafias…

    • It’s still a mafia, due to the State-granted monopoly. I’m referring to the delays restoring power, rather than other aspects of the monopoly.

      It’s possible to have genuine economy of scale, and collect economic rent due to the State-granted monopoly.

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