Cartoon 756: Better and Cheaper

If Moore’s computer processing law applied to electricity, today a kilowatt of electricity would cost a penny [Moore’s law states a doubling of computer processing capability every 18 months].

Today the rates in America for residential electricity vary from 5 cents a kilowatt to 20 cents. But the kilowatt rate advertised is not the whole story of charges. There are thrown in as separate entities surcharges, recovery fees, and distribution charges. In other words, the real rate is a cent or two higher per kilowatt.

Mindset is the problem with electricity in America. America moved electricity as an enterprise sharply away from a highly regulated quasi-government operation to the private sector. That meant more hands in the pockets of companies and the single driver being profits to investors. Therefore investment in infra-structure and maintenance in the new business model were a drag on immediate profits. They could skillfully avoid these activities and keep going up on rates. They also managed to gain control of the media, politicians and regulators. The other factor that drives up costs is the dissolution of vertical integration. The same company that generates the electricity no longer also owns the lines and infra-structure of delivery. This is another investor hand in the pocket.

Only government can and will make long term investments for the larger good of society. It is the government model that works. It worked for much of America’s history and is fueling the BRIC nation’s rapid rise. It is the government model in today’s American political and cultural environment that is being eviscerated.

Postscript

The newspaper reported that in my State there is a clause in the regulatory law: if the electric company loses revenue due to less electric usage [conservation by customers], it can automatically go up on rates to make up the difference, “Catch 22”.