Umair Gaines
A quasi-public corporation is a private company that is backed by a government agency with a public mandate to provide a given service. These companies are often created to benefit the public in some way and are given a government-chartered mission. In return, they usually receive partial funding from the state. Some examples of quasi-public corporations include the U.S. Postal Service, Sallie Mae, and Fannie Mae. Electric grid managers are also considered quasi-public corporations as they operate behind closed doors, affecting public electricity customers, while their corporate structure and inner workings remain unknown to the public.
| Characteristics | Values |
|---|---|
| Type of company | Private company |
| Backing | Government agency |
| Purpose | Benefit the public |
| Funding | Partial funding from the state |
| Employees | Not government employees |
| Operations | Independent |
| Structure | Corporate |
| Inner workings | Shrouded in mystery |
| Public scrutiny | Exempt |
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What You'll Learn
Electric grid managers as quasi-public corporations
A quasi-public corporation is a private company that is backed by a government agency and has a public mandate to provide a given service. While quasi-public corporations are created to benefit the public in some way, they are not part of the government. They are often mistaken for government branches by the public and investors. Employees of such corporations are not considered government employees but are private employees of the company.
Electric grid managers can be considered quasi-public corporations as they work behind closed doors, and their actions affect the public. Independent system operators (ISOs) run the electric grid region by region across the United States, and some even cross state lines. For example, PJM covers Pennsylvania, New Jersey, and Maryland, while MISO covers 11 Midwestern states and part of Canada. NYISO, the New York Independent System Operator, operates within a single state.
ISOs are public agencies exempt from public scrutiny, and their corporate structure and inner workings are shrouded in mystery. FERC charges each ISO with ensuring that electricity is fed into the grid at competitive prices and that the appropriate power-generation mix is in place. However, ISOs like NYISO conduct auctions to determine electricity costs, and these are managed according to arcane rules that seem designed to confuse rather than clarify.
NYISO's tax filings, which are public due to its tax-exempt nonprofit status, reveal that its president and CEO, Stephen G. Whitley, was paid $1,804,749 in 2013. The part-time board of directors also earned substantial salaries, ranging from $55,167 to $156,500 for working 12 to 16 hours per week. These high compensations raise questions about whether ISO auctions are conducted in the public interest and whether the subsidies they provide to old plants benefit their customers and public health.
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Independent system operators (ISOs)
An Independent System Operator (ISO) is an organization that coordinates, controls, and monitors the operation of an electrical power system, usually within a single US state. ISOs are formed at the recommendation of the Federal Energy Regulatory Commission (FERC) and act as marketplace operators in wholesale power. They coordinate generation and transmission across wide geographic regions, matching generation to load to keep supply and demand in balance. ISOs also operate wholesale electricity markets, allowing participants to buy and sell electricity on a day-ahead or real-time basis.
ISOs are typically set up as nonprofit corporations using governance models approved by FERC and/or regional or local commissions. They are similar to Regional Transmission Organizations (RTOs), which perform the same functions but over a larger geographic area. The distinction between an ISO and an RTO can be subtle, with RTOs having greater responsibility for the transmission network as established by FERC.
The fundamental purpose of an ISO, as defined by FERC Order No. 888, is to:
> "...operate the transmission systems of public utilities in a manner that is independent of any business interest in sales or purchases of electric power by those utilities."
In order to comply with this order, groups of participants, or "Power Pools," partnered and proposed the establishment of independent system operations to FERC. The first ISOs to emerge included California ISO, PJM Interconnection, New York ISO, and New England ISO.
As of 2019, there were nine ISOs within North America, including the Independent Electricity System Operator (IESO), which operates the Hydro One transmission grid for Ontario, Canada.
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ISOs' public accountability
A quasi-public corporation is a private company backed by a government agency with a public mandate to provide a given service. While quasi-public corporations are not part of the government, they are often mistaken for government branches by the public and investors. These companies are created to benefit the public in some way and receive partial funding from the state.
The International Organization for Standardization (ISO) is an independent, non-governmental, international standard development organization. It is composed of representatives from the national standards organizations of member countries. ISO has published over 25,000 international standards covering almost all aspects of technology and manufacturing. It has over 800 technical committees and subcommittees that develop and publish international standards in technical and non-technical fields, including food safety, transport, IT, agriculture, and healthcare.
ISO's standards are not available free of charge and must be purchased for a fee. The fees have been criticized as being unaffordable for small open-source projects. ISO 26000, for example, offers guidance on socially responsible behavior and possible actions. It is a set of international standards for social responsibility, developed to contribute to global sustainable development. ISO 26000 was created through a multi-stakeholder process, with approximately 500 delegates from six stakeholder groups: industry, government, NGOs, labour, consumers, and SSROs.
As an independent, non-governmental organization, ISO maintains public accountability through its transparent standard-development processes and the involvement of various stakeholders. By engaging diverse stakeholders, ISO ensures that its standards reflect the interests and concerns of a wide range of groups. The final agreed-upon standard results from deliberation and negotiation, preventing any single group from dominating the decision-making process.
In summary, while an electric company may be considered a quasi-public corporation in certain contexts, ISO, as an international standard-setting body, maintains public accountability through its transparent processes, stakeholder engagement, and commitment to global sustainable development.
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Private vs. public companies
A quasi-public corporation is a private company that is backed by a government agency with a public mandate to provide a given service. They are created to benefit the public in some way and receive partial funding from the state. Examples include the U.S. Postal Service, Sallie Mae, and Fannie Mae.
Now, when it comes to private vs. public companies, there are several key differences to note.
Ownership Structure
Public companies have shares traded on public stock exchanges, meaning anyone can buy, sell, and repurchase shares. On the other hand, private companies are closely held, with a set number of shareholders.
Privacy and Transparency
Private companies enjoy greater privacy, as they have fewer financial disclosure and operational transparency requirements. This allows them to protect sensitive business information and plan for the long term without the constraints of quarterly reporting.
Access to Capital
Public companies typically have easier access to capital due to their ability to issue shares and corporate bonds. Private companies often face challenges in raising funds on a similar scale and may have limited options for increasing their capital.
Investor Liquidity
Shares in private companies are generally illiquid and cannot be easily converted into cash, making them less attractive to investors. Public companies, on the other hand, offer greater liquidity, as their shares can be readily bought and sold on the stock market.
Market Volatility and Risk
Public companies are exposed to market volatility and short-term trends due to their reliance on public trading. Going public poses a significant risk, especially for small companies, as they must be prepared to withstand market downturns and fluctuations. Private companies may have more stability and control over their operations.
In summary, the decision to remain private or go public depends on various factors, including the company's financial goals, desired level of autonomy, and tolerance for external pressures and market risks.
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Government funding and control
A quasi-public corporation is a private company that is backed by a government agency with a public mandate to provide a given service. They are created to benefit the public in some way and receive partial funding from the state in exchange for their services.
The Federal Energy Management Program (FEMP) provides grant funding through its AFFECT program to help federal agencies meet energy and water-related goals, which could include initiatives related to electric companies. Additionally, the US EPA has funding opportunities for electric power utilities to achieve SF6 emission reductions, improve rural electric service, and promote renewable energy systems.
Electric companies can also receive government funding through the American Public Power Association's Demonstration of Energy and Efficiency Developments (DEED) program, which supports projects that increase efficiency, reduce electricity generation costs, and investigate new technologies.
While quasi-public corporations receive government funding and have a public mandate, it is important to note that their employees, including the board of directors and officers, are considered private employees and not government employees.
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Frequently asked questions
A quasi-public corporation is a private company that is backed by a government agency with a public mandate to provide a given service.
An electric company can become a quasi-public corporation when a government agency expresses interest in funding the company and promoting a public activity. For example, independent system operators (ISOs) that manage electric grids are considered quasi-public corporations because their actions affect the public, even though their corporate structure and inner workings are not transparent to the public.
Examples of quasi-public corporations include the U.S. Postal Service, Sallie Mae, and Fannie Mae.
