He's on the right track...

Timothy Sandefur writes,

Now, I generally favor privatization, because I believe the ills associated with it are far less than the ills that come from government management of things such as schools. But privatization must never be looked on as some Grand Solution to our problems?just like school choice plans, while a great and worthwhile idea, are not a solution to the problems created by mandatory, government-run schools. As public choice theory teaches us, there is no solution short of taking the power away from the government completely. [Emphasis mine]

The sad thing is, this isn't even a case of privatization, but private subcontracting of government services. These subcontractors do not face any real competition, which would motivate them to provide the best service possible at the lowest cost; instead, they can rest easy knowing that they have the full force of government protecting their monopoly power. Even if they fail, they know that the government will most likely bail them out. This is crony capitalism at its worst, and arrangments like Edison and California "deregulation" give real privatization a bad name.

These subcontracting deals remind me of Friedman's Law for Finding Men's Washrooms:

"Men's rooms are adjacent, in one of the three dimensions, to ladies' rooms." One of the builder's objectives is to minimize construction costs; it costs more to build two small plumbing stacks (the set of pipes needed for a washroom) than one big one. So it is cheaper to put washrooms close to each other in order to get them on the same stack. That does not imply that two men's rooms on the same floor will be next to each other (although men's rooms on different floors are usually in the same position, making them adjacent vertically).Putting them next to each other reduces the cost, but separating them gets them close to more users. But there is no advantage to having men's and ladies' rooms far apart, since they are used by different people, so they are almost always put on the same stack. The law does not hold for buildings constructed on government contracts at cost plus 10 percent.

[Note to Mr. Sandefur: ACK! My eyes! Change template!]

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This shows that, once again,

This shows that, once again, you can't run government like a business. You can only run a business like a business.
In all of these cases, as you point out, Edison is simply yet another government actor with slightly different funding and governance arrangements.

Why, then, should it be surprising when government fails again? - I say rhetorically...

Jeffrey Friedman refers to

Jeffrey Friedman refers to this aspect of capitalism as "exit" in "Theory Gets a Reality Check."