The Euro Tunnel under the English Channel is a classic example of the dilemma faced by Margaret Thatcher’s national inheritors! The project is an engineering marvel. It ends centuries of Anglican isolation from Europe, albeit in symbolic fashion. Security alerts at Heathrow and other English airports, must surely give the idea of driving or taking a train a great fillip of demand. The service is convenient, rivals commuting to and from airports, and is ecologically sound. Yet, profits remain a hopeless mirage!
The business of utilities is held hostage by the political compulsions of surviving in democracies. Groups of consumers exert unbearable pressure as citizens, and force enterprises to survive on unpaid loans and doles. The latter never addresses cries of private stock market interests! Even pressure to collect legitimate dues from consumers in utilities such as electricity, attracts public ire!
The first woman to head executive government in the U.K. may have passed the nasty buck of managing utilities in the name of reform! Uncertainties of regulation and governance, mounting liabilities, delays in government disbursement of subsidies, and the pressing need to maintain a high rate of continuous investment in upgrades and expansion, make the business of providing a public utility a generally and comparatively unprofitable proposition, at least in stock market terms!
Economic sectors in which prices cover full costs with attractive margins, which enjoy short collection cycles, and in which executives have freedom with respect to legitimate prerogatives, will always offer better and more certain values for stock market investors than public utilities. It may be better to ask governments to deliver essential services from public funds.