Well the electric grid falls in that category of service, like the military where the market is potentially a bad solution. So in this regard. The electric company was able to be negligent to their personal benefit of 1.8 billion dollars of unfunded liability it created. And then they call bankruptcy and that's the end of that chapter.
Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no?
Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).
> Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no?
How is it not personal benefit? This company was essentially acting in the same role as an insurance company for retail customers. They charge a fixed fee for electricity that is above the average price of electricity. When electricity costs less than they charge they make money. When it costs more they lose money. They should have maintained cash reserves from profitable times to handle unprofitable ones. In an extreme situation like the current one in Texas they could seek a loan or already have lines of credit in place to cover any shortfall from their cash reserves. The profit they made went somewhere and it obviously didn't go into a rainy day fund.
If a customer owes money to an electricity company which goes bankrupt, that doesn’t cancel the customer debt. The insolvency firm will sell the debt on for what they can get in order to repay some of the company’s creditors.
But they were benefiting. They have had years of not winterizing their systems, which helped them earn quarter after quarter of profits. Those profits were paid to executives and shareholders, who will not help make up the shortfall now.
