The reason for the organizational shift had to do with the enforcement of the anti-trust laws originally. I think the precedent in this case was the break up of the A&P grocery chain, which owned the farms, the food processing plants and the retail stores.
More recently firms have been split up because it gives more opportunity for speculation by investors. I've never understood the spin off logic. If GM was losing money on its parts division (Delphi) why would anyone want to buy it as a standalone (and mostly captive) firm? Sure enough Delphi quickly went bankrupt. I assume that the bankers who put these deals together get their fees and are thus anxious to see the breakups. But why does the public fall for it?
The breakup of generation and distribution was obviously motivated by such deal making and not by the logic of the business. The authors ignore the "Wall Street" effect and think these steps were taken because of a belief in some free-market ideology. That was just a smoke-screen.
They also ignore the evidence provided by municipal power companies, which are not only vertically integrated, but owned by the public. They provide power at a lower cost than competitors for the usual reasons: financing by tax-exempt municipal bonds costs less than corporate bonds and there is no need to generate a profit. Acknowledging that government can do a better job of providing essential services would be too much for even these renegades to accept. Policies not Politics ---- Daily Landscape
