World Wide Utility Ownership

There is no "best model"

In 2018 the World Bank published an assessment that tried to evaluate the difference in performance between utility ownership models and they concluded, rather unpopularly, that publicly owned utilities can actually outperform private ownership under certain conditions.

Despite the importance of the electricity sector for the economy at large, there is no consensus on the optimal utility ownership type given evidence for both sides. Some studies find that private electricity distribution companies perform substantially better in terms of profitability. Others conclude that privatization often does not give rise to efficiency gains.

With the debate regarding The Unbundling of Eskom, it’s worth keeping this fact in mind. For every good example of privatisation (such as Texas) I can think of notable bad examples (such as Zimbabwe) and it is equally true of good examples of vertically integrated utilities (such South Korea, Canada and many US states) vs bad examples (such as South Africa).

As the map below shows, there is simply no relationship between utility ownership and performance.

The reasons for each country has to be studied independently and economists should not be allowed to get away with simplistic slogans.