Yet another wealthy individual buying up large portions of the Hawaiian islands. The man in the article already owns 98% of the island of Lanai and will soon probably own the electrical company.
Yet another wealthy individual buying up large portions of the Hawaiian islands. The man in the article already owns 98% of the island of Lanai and will soon probably own the electrical company.
Here's another article about it. The way I think about utilities is that you need to look at who pays for capital investments in the average case and in the worst case. If it's self-funded then...
The way I think about utilities is that you need to look at who pays for capital investments in the average case and in the worst case. If it's self-funded then the community has control but there is nobody else to pay any money; it's like not having insurance, so you better not screw up! (Or really, whatever management you hire better not screw up. You can fire them but rate-payers are still on the hook for their mistakes.)
If there are outside investors and they plan to make a profit then it's like having insurance. In the average case, the rate-payers will pay a bit more (the profit margin) and in the worst case, the investors will lose their money. It may be worth it for the same reasons insurance is worth it. Financial security is important.
In this case, there is another possibility: build a bigger power plant than necessary and sell power to another island. From previous stories, I think they've ruled it out, though?
It's not clear to me whether Ellison's company intends to make a profit? What seems clear is that a billionaire is in a good position to sell insurance (in the worst case, he can absorb any losses) and rate-payers are better off buying insurance.
It's like having insurance except you can't shop around for another provider, you have no control over rate increases without government intervention, you have no control over service upgrades or...
It's like having insurance except you can't shop around for another provider, you have no control over rate increases without government intervention, you have no control over service upgrades or extensions...
So actually very unlike having insurance, and instead like having fundamental services owned and controlled by people with out any care for the area in question aside from a financial interest.
It's certainly true that money doesn't come for free; usually there are limitations, some kind of loopholes or strings attached. Insurers will only pay out for certain well-defined risks. If you...
It's certainly true that money doesn't come for free; usually there are limitations, some kind of loopholes or strings attached. Insurers will only pay out for certain well-defined risks. If you sell stock you need to be fairly convincing that there's something in it for stockholders. (Venture capitalists will want a seat on the board.) Bondholders don't want control but they only eat the costs if the venture goes bankrupt and will charge a lot if it looks high-risk.
But the point of the analogy is that if you don't want rate-payers to pay for a disaster, you need to find some other source of funding where investors supply funds and take a risk. It seems like normally when community ownership is discussed, people don't talk about this?
Aside from some very high-profile city bankruptcies, municipal bonds are a very calm market. It's not like investors are actually taking much of a risk. Do people not talk about emergency funding?...
Aside from some very high-profile city bankruptcies, municipal bonds are a very calm market. It's not like investors are actually taking much of a risk. Do people not talk about emergency funding? Perhaps not everyone is planning for the future, but it seems standard to discuss funding sources for any municipal service that isn't self-funding.
For a large, growing community it's quite easy to push the costs to future taxpayers using bonds. The bondholders assume that tax revenue will always be there one way or another, so they aren't...
For a large, growing community it's quite easy to push the costs to future taxpayers using bonds. The bondholders assume that tax revenue will always be there one way or another, so they aren't assuming much risk (or at least they don't think they are).
But what if the community is smaller and not growing? Lanai has only about 3100 people and they aren't wealthy. Well, except for one person.
For natural disasters it's generally assumed that the federal government will provide funding, so that's effectively one form of insurance, but that doesn't cover all risks.
It's true that Lanai City isn't currently large or wealthy, though if Larry Ellison ever follows through on his plans for the island I expect that there'll be a lot more in the way of jobs there....
It's true that Lanai City isn't currently large or wealthy, though if Larry Ellison ever follows through on his plans for the island I expect that there'll be a lot more in the way of jobs there. But the utilities aren't funded based entirely on Lanai City's tax base. The power is provided and managed by Hawaiian Electric Industries.
So the reason that he wants to own the electric grid is because his two major hotels on the island are having issues with the island's power supply. From the article you linked: and So Ellison has...
So the reason that he wants to own the electric grid is because his two major hotels on the island are having issues with the island's power supply. From the article you linked:
Pulama Lana’i (Ellison's company for managing the island) said that its “initial transition phase” calls for creating microgrids with the Four Seasons Resort Lana’i at Manele and the Four Seasons Resort Lana’i at Ko’ele, a Sensei Retreat.
and
In October, Lanai Sustainability Research, a Pulama Lana’i subsidiary, agreed to pay MECO (The current utility company) $15,000 a month to cover $360,000 in overcharges when its battery system was down.
So Ellison has one and is developing a second resort on the island, and is running into issues where the power supply will not hold up to the demand from the resorts, let alone the hydroponic farming setup he's developing there.
Ah, so that's why they are the largest customer. It seems to make sense that they should pay for most of the upgrades? It's not just Ellison's personal money, it's tourism money as well. Tourists...
Ah, so that's why they are the largest customer. It seems to make sense that they should pay for most of the upgrades?
It's not just Ellison's personal money, it's tourism money as well. Tourists want electricity and will pay extra for it. They don't govern anything, but whoever gets the tourism money and provides jobs gains political power that way.
The money is good, but I don't know how you even begin to walk that back towards anything close to equality? Open more bed-and-breakfast places?
Yeah, it's a messy situation. I imagine that in the long term Ellison will want to own the whole island, but it'll take a while to acquire the rest of the property and the rights thereof.
Yeah, it's a messy situation. I imagine that in the long term Ellison will want to own the whole island, but it'll take a while to acquire the rest of the property and the rights thereof.
Yet another wealthy individual buying up large portions of the Hawaiian islands. The man in the article already owns 98% of the island of Lanai and will soon probably own the electrical company.
Here's another article about it.
The way I think about utilities is that you need to look at who pays for capital investments in the average case and in the worst case. If it's self-funded then the community has control but there is nobody else to pay any money; it's like not having insurance, so you better not screw up! (Or really, whatever management you hire better not screw up. You can fire them but rate-payers are still on the hook for their mistakes.)
If there are outside investors and they plan to make a profit then it's like having insurance. In the average case, the rate-payers will pay a bit more (the profit margin) and in the worst case, the investors will lose their money. It may be worth it for the same reasons insurance is worth it. Financial security is important.
In this case, there is another possibility: build a bigger power plant than necessary and sell power to another island. From previous stories, I think they've ruled it out, though?
It's not clear to me whether Ellison's company intends to make a profit? What seems clear is that a billionaire is in a good position to sell insurance (in the worst case, he can absorb any losses) and rate-payers are better off buying insurance.
It's like having insurance except you can't shop around for another provider, you have no control over rate increases without government intervention, you have no control over service upgrades or extensions...
So actually very unlike having insurance, and instead like having fundamental services owned and controlled by people with out any care for the area in question aside from a financial interest.
It's certainly true that money doesn't come for free; usually there are limitations, some kind of loopholes or strings attached. Insurers will only pay out for certain well-defined risks. If you sell stock you need to be fairly convincing that there's something in it for stockholders. (Venture capitalists will want a seat on the board.) Bondholders don't want control but they only eat the costs if the venture goes bankrupt and will charge a lot if it looks high-risk.
But the point of the analogy is that if you don't want rate-payers to pay for a disaster, you need to find some other source of funding where investors supply funds and take a risk. It seems like normally when community ownership is discussed, people don't talk about this?
Aside from some very high-profile city bankruptcies, municipal bonds are a very calm market. It's not like investors are actually taking much of a risk. Do people not talk about emergency funding? Perhaps not everyone is planning for the future, but it seems standard to discuss funding sources for any municipal service that isn't self-funding.
For a large, growing community it's quite easy to push the costs to future taxpayers using bonds. The bondholders assume that tax revenue will always be there one way or another, so they aren't assuming much risk (or at least they don't think they are).
But what if the community is smaller and not growing? Lanai has only about 3100 people and they aren't wealthy. Well, except for one person.
For natural disasters it's generally assumed that the federal government will provide funding, so that's effectively one form of insurance, but that doesn't cover all risks.
It's true that Lanai City isn't currently large or wealthy, though if Larry Ellison ever follows through on his plans for the island I expect that there'll be a lot more in the way of jobs there. But the utilities aren't funded based entirely on Lanai City's tax base. The power is provided and managed by Hawaiian Electric Industries.
What are Ellison's plans? I haven't read about this.
So the reason that he wants to own the electric grid is because his two major hotels on the island are having issues with the island's power supply. From the article you linked:
and
So Ellison has one and is developing a second resort on the island, and is running into issues where the power supply will not hold up to the demand from the resorts, let alone the hydroponic farming setup he's developing there.
Ah, so that's why they are the largest customer. It seems to make sense that they should pay for most of the upgrades?
It's not just Ellison's personal money, it's tourism money as well. Tourists want electricity and will pay extra for it. They don't govern anything, but whoever gets the tourism money and provides jobs gains political power that way.
The money is good, but I don't know how you even begin to walk that back towards anything close to equality? Open more bed-and-breakfast places?
Yeah, it's a messy situation. I imagine that in the long term Ellison will want to own the whole island, but it'll take a while to acquire the rest of the property and the rights thereof.