Monday, September 28, 2015

The public's utility be damned

San Diego Gas and Electric started a the public should pay the bills;
San Diego Gas and Electric is seeking authority to bill its customers $379 million for legal settlement costs left over from 2007 wildfires that destroyed 1,300 homes and killed two people.
In filings with state regulators Friday, SDG&E said customers would pay 90 percent of the costs while stockholders in the investor-owned utility would pay the remaining 10 percent, roughly $42 million.
Of course, where would the utility get the money to pay for anything, but from its customers. After their shareholders were cleaned out, that is. Which brings to this working paper--to which we were alerted by retired NC State economist Craig Newmark--by two Mercatus Center scholars Fred Foldvary and  Eric Hammer
How Advances in Technology Keep Reducing Interventionist Policy Rationales
Which, in part, deals with the justification for having public utilities, such as electricity providers. They exist only as a government policy, not as a natural outgrowth of marketplace conditions. At least as the marketplace exists today.

On site electricity generation is now feasible. I.e. cost competitive with large centralized facilities. The decentralized, local generators also save significant transmission costs. The political barriers to making the switch are political, not economic. The entrenched operators have their ways to prevent competitiors gaining market share (or, in many cases, any share at all);
Small-scale on-site plants require local and state permits, which are costly and can take months or years to procure, or may be denied. Federal agencies such as the Occupational Safety and Health Administration and the Environmental Protection Agency can also block energy enterprise. Taxes on small-scale generation are alos imposed. As Lowi and Crews report (2003...), in California, if a user seeks to exit the grid, "it must pay tribute of up to $6.40 per kW of its own generating capacity per month." 
Hey, San Diego is in California! Maybe, if there were no political barriers to entry in the generating business, SDG&E might have gone bankrupt (with its shareholders bearing the losses from the fire they started) and the public's utility would be provided by some other (perhaps more socially responsible) electricity providers.

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