Should basic services such as water, gas, and electricity utilities be governed by the free market? Or should they be considered a “public good”, and nationalised to keep prices down? It’s an old leftwing policy that fell out of fashion in the 1980s, but with energy prices skyrocketing and vulnerable households facing energy poverty, could it be time to resurrect it once more?
Proponents of nationalisation argue that private companies hike up prices and focus on profit over people. Utilities often create natural monopolies, and consumers cannot choose to stop consuming water, gas, or electricity – therefore, the logic of the free market starts to break down (or so goes the argument). Critics respond by pointing out that publicly-owned alternatives were inefficient and plagued by political interference from governments who only thought about winning the next election.
What do ours readers think? We had comments on this topic from Любомир (Liubov), Jonathan, Rosy and Nando. To get a response, we put them to Manuela Ripa, a German MEP who sits with the Group of the Greens/European Free Alliance and a member of the European Parliament’s Committee on Industry, Research and Energy.
For another perspective, we also put Любомир (Liubov)‘s comment to Magdalena Maj, Leader of the Energy and Climate Team at the Polish Economic Institute. Our reader had suggested that “All infrastructure utilities should be publicly owned and regulated on a national, and possibly EU level.”
How would Magdalena Maj respond?
It is very difficult topic that Liubok raises in his statement. Do I agree with this or not? I guess I wouldn’t say yes or no definitely. I may say what the experts currently are saying also from other European countries, where this infrastructure is not owned by the state. There are voices that regret that this infrastructure was privatized. But we must firstly hope that this difficult situation in Ukraine, this Russian invasion, will end soon and that the whole energy crisis which started after the pandemic and the pandemic itself, hopefully, will end soon.
So, in a different reality, in a normal reality, I would say that it is better to have privatized infrastructure of production of energy and transmission systems, so the grids and the pipes. because there is a market and competition and there is improvement etc. now in such a crisis it’s easy to forget about it and we may see that the easier and better solution would be to have this critical infrastructure owned by the state, because then it could be easily regulated. But in normal times there are huge disadvantages with that.
From the Polish experience, I may say that after the nineties, Poland made a huge effort for the liberalisation of energy infrastructure. And without this, we would be even more stuck with fossil fuels and old non-efficient infrastructure than we are now. So, I understand the way of thinking, but over a long term period I think it’s better to have private infrastructure.
Should water, gas, and electricity utilities be nationalised? Or is the free market the most efficient way to deliver basic services at an affordable price? Let us know your thoughts and comments in the form below and we’ll take them to policymakers for their reactions!