Market Monopoly

Market Monopoly: New York Power Authority

A person living in New York or a company that is located in New York is likely to be obtaining their electricity from the New York Power Authority. The New York Power Authority is the only state-wide provider of electricity providing its services through the use of 17 generating facilities and over 1,400 miles of transmission lines. The company was established in 1931 and is presently regarded as the US' largest state-owned providing the generation and transmission of electricity (New York Power, 2006).

Business Description

Pricing Strategies

The New York Power Authority has the task of providing low-cost electricity that supports the State's economic progress while also developing clean energy sources. Pricing is created to maximize profit, reduce debt, and to further the development of additional electricity generating facilities. On April 30, 2003, the New York State Power Authority announced a price increase to help pay for approximately $700 million in the life extension and relicensing costs of two of its major hydroelectric plants. The increase will range from 12 cents per month to 60 cents per month depending on location of the consumers. The power company will try to maintain its profit level by keeping equilibrium between its marginal costs and marginal revenue. The costs to the customer are considered minimal since the increases are spread out over a period of at least four years. The company also uses non-pricing strategies to strive for the efficient delivery of electricity (Government Alert, 2004).

Non-Pricing Strategies

Having a positive public image along with governmental cooperation is important to the success of the New York Power Authority. For example, it uses hydropower methods to generate electricity which accounts for more than 80% of its production. Not only does hydropower provide some of the nation's least expensive electricity, it supports the company's commitment of being friendly to the environment. Demonstrating positive