Municipalization

Municipalization is the transfer of corporations or other assets to municipal ownership. The transfer may be from private ownership (usually by purchase) or from other levels of government. It is the opposite of privatization and is different from nationalization. The term municipalization largely refers to the transfer of ownership of utilities from Investor Owned Utilities (IOUs) to public ownership, and operation, by local government whether that be at the city, county or state level. While this is most often applied to electricity it can also refer to solar energy, water, sewer, trash, natural gas or other services.[1]

Between 2006 and 2016, there have been 13 different communities in the United States that have successfully switched from an IOU to a municipal utility. Most of these communities consisted of 10,000 people or less. Although proponents of municipalization have attempted to municipalize via ballot initiatives, many have failed.[2]

Primary barriers to municipalization

Motivations

The key motivation for municipalization stems from a difference in priorities and goals of the community members and the incumbent utility. While incumbent IOUs have a single, focused objective--reliable and safe electricity at the minimized cost, municipalized utilities also focus on the pursuit of other policy goals, especially sustainability measures and experimentation with alternative energy policy.[1] Efforts to municipalize often also begin with the sentiment that the IOU is not managed well and the notion that by undertaking municipalization of electricity services, a city government can better capture profits and exercise greater control over electricity generation and distribution (also often tying this process to sustainability measures).[3] There is also a neoliberal argument stemming from the historical formation of utility conglomerates. The transition from Direct Current systems to Alternating Current systems in the early twentieth century allowed for greater access to electricity for Americans and enabled the electricity industry to shift to a larger scale. The economies of scale associated with providing a utility created natural monopolies and the associated consolidation of different types of electrical service in urban areas: street lighting, building lighting, industrial machinery, and streetcars.[4] The recent efforts to municipalize electricity represent a return to municipalization as a mechanism to curb monopoly power and corruption. It is also important to acknowledge that the monopoly power of many incumbent utility providers means that they have strong financial and political resources to resist municipalization.[4] Additionally there is always a legal factor with municipalization and state laws governing municipalization vary widely across the country sometimes making the process impossible.[1]

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