What can Brazilian power lines teach New York about introducing private-sector competition to its public-bus system?

In 1999, Brazil started to hold auctions open to both public and private sector players interested in improving the nation’s transmission grid. Brazil has to have a robust transmission grid, because electricity created by water power has to travel a long way so that a rainy season in one region can complement a drought in another.

Brazil thought power lines were a good place to introduce competition because the projects are highly capital-intensive, but easy to execute. That is: it takes a lot of money to build a transmission line, but it doesn’t take a genius to actually build and operate it. There’s little in the way of “bleeding edge” technology and the like.

Plus, power lines afforded a relatively straightforward, easy way to conduct an auction. Investors would simply bid on the lowest tariff they would require to run the lines. Also, if a winning bidder did somehow screw it up, the results wouldn’t be catastrophic. No winning bidder would have a monopoly on the whole system.

After nearly a decade of this system, although there have been a few problems, Brazil seems generally happy with the results (if anyone in the know thinks otherwise, let me know — being far from Brazil, I’m happy to crowdsource a bit on this one). Successful private and public bidders, sometimes a mix of the two, have increased transmission capacity by a third, and brought costs down.

OK — good for them. But what does that have to do with buses in New York?

Well, buses are just a form of transmission lines, really, and they share the factors that made Brazilian power lines a good place to experiment with competition.

Running a bus service is capital-intensive (sort of), in that a small company must first finance and buy a fleet of buses, which cost about $500,000 each, more if you want bells and whistles.

But it doesn’t take ingenious technological know-how or management to run the buses, just a reasonable level of competence and intelligence. That’s why a generation of Chinese-American entrepreneurs, without apparent management or transportation background, has been able to make such a success of the business on the Boston-New York route, raising the bar for older-line operators.

There are no hidden risks to screw up the bidding, as there are with underground transit projects. Underground, particularly on complex projects like signalling, private-sector contractors can’t really see what’s down there, and what the real cost will be, until they’ve signed the contract and started digging. Reality often requires expensive change orders after the contractor has already gained a monopoly on the work.

And, just like in Brazil, there’s no reason why contractors couldn’t bid on the lowest tariff they’d require to run, say, a fleet of express-service buses from Coney Island into Manhattan and back ten times a day. If the routes were profitable enough, the tariff could end up being negative, with the bus companies paying the state and city for the privilege of charging riders market prices for good service.

Short contracts would mean that if a bus company screwed up, it wouldn’t matter much. The company would simply lose his contract at its expiration, or earlier if warranted by the contract terms and performance.

And the mobility of the underlying assets — buses — would mean that the lenders needed to finance the buses wouldn’t be put off by that risk of contract loss. They could simply seize the assets and sell them to another operator.

You may also like

Judge, Jury and … CFO?

A state court judge at a hearing this morning will consider whether to interfere with New York City authority over its own budget by ordering a preliminary injunction that ices a portion of Gotham’s recently enacted FY 23 city budget. Read More

The Numbers Don’t Add Up on Cider Solar Project

Governor Hochul has just announced approval for the state’s largest to-date solar facility, the 3,000 acre Cider Solar Farm in Genesee County Read More

New York Doesn’t Need the Build Public Renewables Act

Assembly Speaker Carl Heastie called for a special hearing this Thursday to get more input on the Build Public Renewables Act. Read More

NY’s jobs recovery now strongest downstate

The Empire State's private-sector employment gains over the past year have been increasingly concentrated in New York City. Read More

Heatwave Demonstrates Weakness of New York’s Electric Grid

High temperatures caused New York City Mayor Eric Adams to announce that hundreds of buildings will cut back on energy use to help ensure electrical grid reliability. Read More

NYISO: New York Electric Grid Remains at Risk

New York’s electrical grid could fail as early as 2023, if the state experiences a sustained 98-degree heat wave. Read More

Deadline Extended for CLCPA Scoping Plan Comments

New York’s Climate Action Council has announced an extension of the comment period on the state’s draft Scoping Plan for the implementation of the Climate Leadership and Community Protection Act. Read More

To Encourage Investment, Hochul Should Veto the Crypto-Mining Moratorium

Among the bills rushed to the governor’s desk was a two-year moratorium on certain types of cryptocurrency mining. Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!