The Energy Alliance announced that efforts in Florida to create city-run electric utilities, such as in Clearwater and St. Petersburg, carry high costs and risks without guaranteed savings, with analyses projecting billions in acquisition, separation, and transition expenses.
According to the Business Daily Network opinion by Bill Peacock of The Energy Alliance, “municipalization is pitched as a way to lower rates but involves high costs and risks without guaranteed benefits. Public ownership faces the same capital needs as private utilities but with fewer advantages, often leading to abandoned efforts due to legal and operational challenges. The piece cites examples where projected savings vanished upon detailed analysis, replacing profits with long-term debt while risking ratepayer burdens,” Peacock said.
Recent case studies have highlighted the challenges associated with municipalization. The Brattle Group reported that Boulder, Colorado, spent nearly $29 million over a decade pursuing municipalization before abandoning it in 2020 due to litigation and rising acquisition costs exceeding voter-approved limits. Utility Dive said a report found forming a municipal utility in Chicago could cost $8.8 billion and require over $300 million more in annual revenue for the first three years compared to ComEd rates. These cases illustrate regional failures where costs escalated and initial rate increases were projected.
The broader trend shows similar results nationwide. The Brattle Group analysis showed that over the past 25 years, approximately 64 municipalization initiatives in the United States have been initiated and resolved, with only five resulting in ongoing municipal utilities after acquisition or condemnation. This represents an 8% success rate, as 92% were abandoned, rejected by voters, or sold back to the original utility due to high costs and risks. Nationally, most efforts fail amid escalating expenses and uncertain outcomes.
The Energy Alliance operates as a project of the Texas Business Coalition focused on energy policy research. It examines federal and state regulation of electricity markets, renewable energy, subsidies, and the ties between free markets, regulatory policy, and economic prosperity. The organization conducts studies on issues impacting consumers and promotes policies supporting efficient energy systems.
