Saturday, July 7, 2012

Business friendly regulation

I haven't left yet and I'm nearly packed (though the suitcase, while under limit, is heavy). So perhaps I'll clean out a backlog of articles before I go.

First, a little image of my upcoming trip. This photo is from Wikipedia and is an aerial shot of Venice. The tallest spire is the bell tower at St. Mark's Cathedral.

Terrence Heath describes one reason why the power isn't back on in some Mid-Atlantic states. He lives outside Washington, DC and his post is about PEPCO, the electric utility for his area. He was fortunate -- he and his family left for vacation the day after the power went out and didn't have to endure five sweltering days waiting for it to come back on. Heath lists these contributing factors:

* About six years ago the GOP governor of Maryland filled the Public Service Commission with cronies, which "lobotomized" it. PEPCO was left accountable to no one.

* Because there was no accountability PEPCO was rated last in reliability -- power was interrupted more frequently and stayed off longer compared to other power companies. PEPCO stopped participating in these surveys.

* PEPCO has a tax rate of minus 57% (better than that for GE). The gov't pays PEPCO. Even so, PEPCO collects taxes from its customers.

* PEPCO found a little known regulation that allows it to recoup expenses for electricity it didn't sell when usage drops. Translation: in an outage the customer pays anyway. PEPCO gets paid whether it delivers electricity or not. There is no incentive to fix outages or upgrade equipment.

Heath says:
So, to recap, we have have a government-subsidized, untaxed, virtually unregulated, corporate monopoly (rather than a city utility) that has no real incentive to reduce outages or downtime, because (a) there’s nowhere else for its customers to go for electricity, and (b) they get paid whether they’re supplying us with power or not.

I guess that’s business friendly regulation for ya.
There is a glimmer of hope for Heath and residents in the area. Maryland now has a Democrat governor, who has replaced the members of the Public Service Commission. These new members are now paying very close attention to PEPCO.

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