Your Power Is Out? Too Bad, You Can't Leave

[BIJAN]: Hey everyone, I'm Nishant's friend Bijan and I'm doing the intro tonight, because last night my power went out. Everyone else in my building has power, it was just my unit that went out. I called Georgia Power and they said they were working on it and it would be fixed by 9:30 PM. Then 9:30 became 10:30. Then 10:30 became 12:30 AM. Each time I called back, the answer was the same: "We're working on it." No timeline, no explanation, just a vague promise that kept getting pushed back. Meanwhile, my fridge was full of food that was slowly going bad. When I asked about compensation for the spoiled groceries, they told me my bill would be reduced because I was "using less power." I wasn't using less power. I didn't have access to power. And that's when I called Nish and asked: if any other company treated its customers this way, you'd switch to a competitor. So why can't you switch power companies?

Turns out, the answer is that Georgia Power is a legal monopoly, granted exclusive rights by the state to be the sole electricity provider in its territory. Every family and business in that territory is legally required to buy power from them. There is no competitor. There is no alternative. And that changes everything about how the company treats you. Now I'll hand it to Neesh for the story The utility monopoly system goes back to 1882, when Thomas Edison, who we covered in Friday's episode, built the first commercial power plant on Pearl Street in Manhattan. The infrastructure required to deliver electricity, the generators, the transmission lines, the transformers, the poles, the wires running to every home, was so expensive that it didn't make economic sense for multiple companies to build duplicate systems in the same area. Imagine two separate companies running two sets of power lines down the same street, each serving half the houses. The redundancy would double the infrastructure cost and neither company would generate enough revenue to justify the investment. Economists call this a "natural monopoly," a market where the most efficient outcome is a single provider because the upfront costs are so high that competition would be wasteful.

The trade-off was supposed to be simple. The government grants the utility exclusive rights to serve a territory, guaranteeing them a customer base with no competition. In return, the utility agrees to be regulated by a state agency, usually called a Public Service Commission or Public Utilities Commission, that oversees the rates the company can charge, the quality of service it provides, and the investments it makes in infrastructure. The regulator is supposed to act as a substitute for competition: since the market can't discipline the company through customer choice, the government disciplines it through oversight.

That was the deal in 1882. The question is whether the deal is still working 144 years later. Georgia Power is owned by Southern Company, one of the largest utility holding companies in the United States. Georgia Power serves about half the state's residents and is regulated by the Georgia Public Service Commission, a five-member elected body. The PSC is supposed to function as a watchdog, ensuring Georgia Power provides reliable, affordable electricity and doesn't abuse its monopoly position.

A 2025 report from Georgians for Affordable Energy described the relationship differently. It called the PSC Georgia Power's "business partner" rather than its regulator, noting that the commission routinely grants rate increases, approves infrastructure spending that benefits the company's shareholders, and issues redactions on data that nearly every other state commission in the country considers public information. Georgia Power's rates have increased significantly over the past decade while the company's parent, Southern Company, has delivered consistent returns to shareholders. The company is in the process of completing Plant Vogtle, a nuclear power plant expansion that is years behind schedule and billions over budget, with the cost overruns passed directly to customers through higher rates.

This is the regulatory capture pattern from our episode on Anthropic and the Fable ban, and from Bill Gurley's speech about incumbents loving regulation. The regulator is supposed to protect the consumer from the monopoly. But the monopoly has more resources, more lobbyists, and more institutional knowledge than the regulatory body overseeing it. Over time, the relationship between the two stops being adversarial and starts being cooperative. The regulator approves the rate increases. The utility generates reliable returns. And the customer, who has no alternative and no leverage, pays whatever the bill says.

The food in my friend's fridge is a small example of a much larger dynamic. Most states do not require utilities to compensate customers for food spoilage during power outages unless the outage was caused by the utility's negligence, which is extremely difficult to prove. The standard policy is exactly what my friend was told: your bill will be lower because you used less electricity. The company frames the outage as a reduction in service rather than a failure of service, and the customer absorbs the cost of the failure while the company absorbs nothing. If your internet provider cut your service for twelve hours, you'd switch to a competitor the next day. If your power company does it, you call the same number and wait. The natural monopoly argument made sense in 1882 and it still partially makes sense today: you really don't want three separate companies running three sets of power lines down your street. The transmission and distribution infrastructure, the wires and poles and substations, is a natural monopoly. Building duplicates would be wasteful.

But electricity generation, the actual production of power, doesn't have to be a monopoly at all. A solar farm in south Georgia, a wind installation in west Texas, or a rooftop solar array on your house can all produce electricity that feeds into the same grid. The infrastructure that carries the electricity is a natural monopoly. The companies that produce it don't have to be. Several states have deregulated their electricity markets, separating the generation of power from its distribution and allowing customers to choose their electricity provider while the grid infrastructure remains a regulated monopoly. Texas, a portion of which operates on a deregulated grid, allows customers to pick from dozens of retail electricity providers competing on price and service.

Deregulation has its own problems, as Texas discovered during Winter Storm Uri in 2021 when the competitive market failed catastrophically and hundreds of people died. The competitive model can produce lower prices and faster innovation, but it can also produce underinvestment in reliability because cutting costs is how competitive companies maximize profit. The regulated monopoly model produces more reliable infrastructure, but it also produces higher prices, slower innovation, and companies that treat their customers the way Georgia Power treated my friend, because the customer has no leverage and the regulator has limited incentive to force change.

The honest answer is that neither model is clearly better in all situations, which is why different states have chosen different approaches and why the debate hasn't been settled in over forty years of arguing about it. What is clear is that the current system, where a for-profit corporation is granted a guaranteed customer base by the government and regulated by a body that often acts more like a partner than a watchdog, creates exactly the dynamic my friend experienced: a company that can leave your power off for twelve hours, offer no timeline, refuse to compensate you for the food rotting in your fridge, and face no consequences because you have nowhere else to go. So if this comes up in conversation, here's how to think about it. Utility companies are legal monopolies, granted exclusive rights by state governments to be the sole electricity provider in their territory. The system started in 1882 with Edison's first power plant and was designed as a trade-off: guaranteed customers in exchange for government oversight. The oversight is supposed to substitute for competition, but in many states, the regulatory body acts more like a business partner than a watchdog. Georgia Power serves half the state's residents, is owned by a publicly traded holding company, and passes cost overruns from delayed infrastructure projects directly to customers who have no alternative provider. Most states don't require utilities to compensate customers for food spoilage during outages. The company frames lost power as "reduced usage" rather than a service failure. Some states have deregulated their electricity markets, which can lower prices but can also reduce reliability. The fundamental problem is that when you can't switch to a competitor, the company has no market incentive to treat you well, and the only thing standing between you and bad service is a regulator who may or may not be doing their job.

Stay informed, stay curious, and we'll see you tomorrow.