The American Spectator

home
ADVERTISEMENT
Print Email
Text Size

The Spectacle Blog

About those utilities, like Exelon, AEP, NextEra, which are ‘folding’ on something they actually had been pushing — the GHG rationing/’clean energy economy’ agenda (see here, here, here, here for examples) — it’s time to capture what they’re up to in a phrase.

“Tax collectors for the welfare state” gets half of it, and may suffice despite omitting the part about their taste, wetting their beaks in return for the effort.

You see, unlike the world you live in which must be innovative to succeed, they generally make money not by getting you to buy more of their stuff. They make money under a cost-plus model, sometimes now called ‘decoupling’. If you are say PG&E in California, pushing the global warming agenda hard, you stand to benefit at the ratepayer’s and economy’s expense because your guaranteed rate of return, 11.35%, says you’ll never get reaalllly rich. But since you make more the more the state makes you spend on capital expenses, you figure out you can do a lot better getting 111.35% of a few billion than you would 111.35% of a few hundred million.

Don’t cost nuthin’. The poor saps who weren’t at the table pick it up. If you’re a utility, as AEP CEO Mike Morris has admitted, the beauty of the system is you get it all back with a little sumpn’ for helping out. You actually make out on the deal, while the public — presuming you are there fighting expensive policies, not thinking that you’ve arranged a scheme to benefit from expensive policies, thinking ‘well, if these guys say it’s ok, well…’

So you lobby to get the state to make you buy all sorts of expensive stuff.

Here we see the moral hazard of having these people serve, effectively, as the policymaking gatekeeper to protect the public from kleptocrats, presumed to be there fighting essentially on your behalf by opposing expensive policies, but in fact pushing them because they operate on a cost-plus model.

This Congress needs to ensure the voters are represented somehow. It is too simplistic and ignorant of reality to pretend that the elected Members serve that role. They’re the policymakers, ‘representing all’, but dealing with the people with the deep-pocketed voice.

We killed the ‘inevitable’ cap-n-trade. Now it’s time to clean up this mess.

View all comments (2) |

uncle curmudgeon| 3.2.11 @ 12:29PM

Right you are, Chris. This is the same model we saw with the sub-prime fiasco. The gubmint tells industry to do that which can only fail; or else we'll call you a dirty name (with sub-prime the name was racist). Industry's "titans" cringe and promise to do as they are told. As soon as the big meanies go away industry repairs to the Boardroom where the method for incentivizing stupidity is hammered out. (almost) Everybody wins; and there's still time to get any early afternoon tee-time. We have a lot of work ahead of us, my friend.

Rogue Elephant| 3.2.11 @ 2:35PM

That's one of the problems with state-chartered monopolies and cartels, isn't it? They use the power of the state to extort monopoly rents from consumers.

More Blog Posts by Chris Horner

http://spectator.org/blog/2011/03/02/utilities-the-new-tax-collecto

ADVERTISEMENT

SPONSORED LINKS

FLASHBACK TO: 1995

Clip of the Day

Most Popular Articles

Obama and the IRS: The Smoking Gun?

Jeffrey Lord | 5.20.13

The Inoperative Jay Carney

Jeffrey Lord | 5.23.13

Holding AWOL Obama Accountable

Betsy McCaughey | 5.23.13

Obama's Imbroglios

R. Emmett Tyrrell, Jr. | 5.23.13

Lerner's Plea

Ray V. Hartwell | 5.23.13

Time to Go for the Kill

Peter Ferrara | 5.22.13

Laying Down My Pen

Quin Hillyer | 5.23.13

ADVERTISEMENT