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Politics Everywhere: Power Outages

- February 10, 2010

During the first 27 years of my life I associated power outages with trips to various developing countries. Now I associate it with winter storms. The reason, of course, is that in the Netherlands (where I grew up) power lines are generally buried underground except in the most rural of areas. In the U.S. this is mostly not the case even in some very urban areas like the parts of Washington DC where I live. During the last storm more than 200,000 people lost power, many for several days. Since winter storms tend to go together with short cold days, this is all rather unpleasant and even dangerous, especially for the elderly.

What explains these differences? As far as I understand it, the ex ante cost of burying power lines is about twice as high as hanging them. Maintenance is less frequent but more expensive when it needs to occur on buried lines. The big advantages of burying are the externalities. This suggests that it may be a public-private thing. I.e. private monopolists (or oligopolists) do not internalize the externalities as well. But I don’t know this area well. Perhaps malapportionment leads to an underinvestment in urban infrastructure? Any other hypotheses?

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