Dr. Joseph Zingaro is a resident of Dover.
Last week, I received a “share of the profit” check from the Delaware Electric Cooperative. I have gotten one each year for the past 10 years! Yes — for 10 years, I have received checks from my (former) electricity provider from profits it was able to make. Ten years ago, I moved to Dover. I wrote Rep. Lyndon Yearick, R-Magnolia, asking if I could switch back to DEC. My son-in-law also wrote Rep. Yearick a similar email. Here is the representative’s response, received March 6:
“Delmarva Power is a for-profit energy company while the Delaware Electric Co-op is a non-profit with their customers as members. Over the last fifteen years, the Delaware General Assembly has passed legislation that mandates electric companies/providers acquire much more costly and less reliable electricity from wind and solar versus the less costly and more reliable electric generation that natural gas can produce. Regardless of weather, consumers and businesses are going to continue to face higher energy bills if we do not create more dispatchable, reliable energy from natural gas.”
So, the solution is to mandate electric companies to provide less costly electricity from a reliable source, like natural gas? “Co-ops return more than $1 billion to their consumer-members annually as not-for-profit organizations” — “Electric Co-op Facts & Figures,” National Rural Electric Cooperative Association, April 19, 2024.
The Delaware Electric Cooperative is a nonprofit. Delmarva Power is a for-profit entity. Delmarva Power has a fiduciary duty to make decisions that will be good (profitable) for its investors. That means that it needs to charge enough for services to cover the cost of providing electricity, plus provide shareholders with profit. That means, even if it costs DEC and Delmarva Power the same amount of money to provide service, Delmarva Power is, in effect, going to add additional costs for its investors. The consumer pays the additional cost — regardless of whether or not we are talking about coal, windmills or natural gas.
Do utility companies have to be for-profits? The obvious answer is no, and the co-op is evidence of that. “Around 59% of utility companies in the US are considered non-profit, as they are ‘public power’ utilities which are publicly owned and not for-profit, while the remaining percentage are investor owned for-profit utilities” — American Public Power Association.
All for-profits have a duty to make money for their investors. Imagine if schools were for-profit. Where would you save money to pass along to your investors? Every student buys their own books? Brings their own food? Finds their own way to get to school? No sports (unless you have a winning team and can make money from spectators). No nurses, no school counselors, reduction in the number of custodians and the number of administrators, etc.
Regarding health care, there are many reasons those costs have risen, and no one solution will make health care more affordable. Blue Cross Blue Shield used to be a nonprofit. “According to their charter, the Blues were nonprofit and accepted everyone who sought to sign up; all members were charged the same rates, no matter how old or how sick. … By some accounts, Blue Cross Blue Shield became, like Walter Cronkite, one of the most trusted brands in postwar America. But the new demand for health insurance presented a business opportunity and spawned an emerging market with other motivations” — Stanford Medicine Magazine, May 19, 2017.
Another motivation was incentivizing doctors to change how they provided care, so fewer services were provided (and there would be fewer reimbursements from the health care provider). Then, there are the administrative costs. Administrative costs are nonclinical expenses passed on to the consumer. Where do you think those multimillion-dollar bonuses for officers in the health care industry come from? The Center for American Progress estimates that the administrative costs for Medicare and Medicaid are around 2%-5%. The administrative cost for private insurance is around 17%.
In my opinion, there are certain industries that should be nonprofits because of their ability to touch every single American and have a large impact on their lives. Remember life, liberty and the pursuit of happiness? It’s hard to be happy when you are suffering from poverty, inadequate access to appropriate health care, etc. What might be the effect if, like our public schools, our electric companies and health care companies were nonprofits? What could you do with the money you would save? Nonprofits work as well as for-profits.
We cannot continue to make every amenity/industry tempt Americans to value profit over service. You can only have one thing that is “first place” for you, that is your true priority. Is it family? Church? Money? Do your actions speak louder than words and coincide with your stated life priority? That’s a question I am going to ask my political representatives: Are you making decisions based on quality-of-life issues or quantity-of-profit issues? Does a mandate represent going through the motions or a lack of creativity? Let’s be bold and make laws that help citizens, regardless of their income. Let’s think outside the box.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
