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An electricity company cannot be run like a stall in the market

Dec 13, 2009 Letters

Dear Editor,
It is not the first time it has happened and it will not be the last. A few weeks ago many parts of a city of 200,000 people were almost totally without power. Many houses were in darkness and GPL-dependent businesses ground to a halt. Normal life was suspended. It was more than five hours before power was restored.
It’s this kind of reality that rams home to ordinary people what otherwise exists only as a theory. Electricity is not a commodity like a Christmas ham or cake where an interruption of supply poses no wider consequences; it is a precondition for successful modern life.
If the owner of the power and distribution system fails to maintain supply it is an issue for everyone. In economic terms, electricity is a public good. This means that an electricity company like GPL cannot be run on the same commercial terms as a butcher shop or stalls in the market where there are many suppliers and the consequences of poor decision-making are restricted to the butcher and the stall owners themselves.
An electricity company has to carry more investment and capacity than is necessary on strict commercial grounds; must have higher safety margins; and operate with a high standard of efficiency. Because it is a monopoly, the best way to meet these criteria is for the company to invest in top grade, competent managers and have a system of performance targets on which their remuneration is based. These targets should be linked to consumer satisfaction with the service so that poor performance has the effect of reducing management remuneration. This is the only way the reality of constant power outages will engender the type of action that is lasting and beneficial.
F. Hamley Case

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