Fix Connecticut’s big problems before trying to seize utilities

In principle there’s nothing wrong with government ownership of electricity, water, and gas delivery utilities, since they are natural monopolies. People building a state or country from scratch might do best to start that way — if they have the necessary capital.

But lacking the necessary capital, Connecticut did not start that way and now its basic electricity infrastructure is already in place. So advocating municipal government ownership of electric utilities, as Hamden state Rep. Josh Elliott is doing in his challenge to Governor Lamont in the Democratic primary, is a silly distraction from the state’s far more compelling problems. Elliott’s idea is just a way for him to display his leftist inclinations and to demagogue against big utility companies, as if government isn’t far bigger and often far more exploitive.

Elliott would authorize municipalities to commandeer the electrical system within their borders through an eminent domain that would allow purchase to be made at less than market value of the property seized. This would be of doubtful constitutionality. But even such a steal still would require payments in the scores of millions of dollars, money that would have to be borrowed and repaid with interest for many decades, money municipalities often don’t have for their regular capital improvement needs.

There also would be the challenge of management. The town would have to assemble a staff with a technical expertise it now lacks.

There would be risk in separating the state’s electrical grid into smaller units. The state already has five municipalities with their own government-owned electric companies and it manages well enough with them, since most have been around for a century, having begun when electrification was new. But having more electric companies would diminish the economies of scale provided by statewide and regional electric companies.

Establishing a municipal electric company would be doubly expensive because the new company, unlike investor-owned utilities, would be exempt from municipal property taxes, even as investor-owned utilities are the largest property taxpayers in most towns. Municipal electric companies are also unregulated by the state, so they provide less legal assurance of consumer protection.

Yes, electricity in Connecticut is nearly the most expensive in the country, but this is less because the electric utilities are shareholder-owned, strive to earn a profit, and pay some executives excessively than because inflation has increased energy costs generally, the state lacks adequate access to natural gas and won’t use coal, and because state government taxes electricity heavily with its lately infamous “public benefits” charges.

While municipally owned electric utilities provide electricity cheaper in large part because they are exempt from property taxes and “public benefits” charges and don’t have regional service obligations as the major electric companies do. The municipal systems don’t generate their own electricity and would be lost if they could not obtain it by connecting to the regional electric companies.

This doesn’t mean that government ownership of utilities can’t be made to work in a broader way. It means that government’s acquisition of regional utilities or local components would be hugely expensive and that socializing them on a scattershot municipal basis, as Elliott contemplates, would be complicated, disruptive, and distracting to government without offering any guarantee of reducing electricity bills in the foreseeable future.

Connecticut’s schools are failing the poor, remain largely segregated racially, and still cost more every year without improving their results. The state’s transportation system is creaky. The state has a desperate shortage of housing, and homelessness is rising. State government’s pension obligations remain grossly underfunded. Municipal property taxes keep rising, also without an improvement in services to the public. The state’s cost of living is soaring and no one in authority even tries to reduce the cost of government itself lest government’s employees be offended.

So whether he is elected governor or is just re-elected to the General Assembly, Elliott should apply his socialist inclinations to those problems for a few years before trying to take the electricity business apart. Government in Connecticut has no competence to spare.

Chris Powell has written about Connecticut government and politics for many years.