The electricity and water utility industries are mirror images in a way. Government agencies service roughly 85% of water consumers and investor-owned companies the rest. Investor-owned utilities serve roughly 85% of the electricity market and government agencies serve the balance. Government agencies provide both essential commodities at a lower cost in both markets. This is not because they are operationally more efficient but for two other reasons: very low tax rates and significantly lower capital costs. Regarding capital costs, financial theory…
