RSS Feed MenuHidden in an obscure congressional amendment is a big gift to pet Democratic interest groups – and a big betrayal of the Democrats’ supposed green principles.
In recent years, as energy prices skyrocketed, consumers reacted by conserving. They switched to high-efficiency light bulbs, lowered thermostats, and invested in more efficient refrigerators and air conditioners.
This is good news for the efficiency of the U.S. economy. It’s bad news for the bottom lines of electric utilities who make money by selling more power, not less.
House Energy and Commerce Chairman Henry Waxman (D-Calif.) has a different idea. It goes by the technical name, “revenue decoupling.” What it does is not technical at all. It allows utilities to protect themselves against declining consumer demand by charging higher and higher prices. As consumers cut their power usage, utility companies will benefit from the ability to raise their rates to maintain revenue levels. The consumer loses the incentive to be a good conservationist while the power company reaps the benefit of reward.
This approach removes all incentives to cut down on power use. And Republicans are not the only people to have noticed.
The people who regulate the utilities at the state level are baffled. The National Association of Regulatory Utility Commissioners wrote to the minority and majority leaders of both chambers of Congress, calling attention to the damning nature of the amendment, saying the ratemaking preconditions “will risk confusion, and could unnecessarily delay effective energy conservation efforts and the delivery of stimulus funding into the economy.”
Businesses who use electricity are angry too. In correspondence to Energy and Commerce Chairman Waxman and ranking member Joe Barton (R-Texas) acquired by NewMajority, the American Forest & Paper Association spoke out against the proposed legislation.
The AF&PA warned the ramifications of the bill’s passage “will diminish manufacturers’ incentives to improve their energy efficiency, and raise their overall energy costs.”
So far, these protests have achieved nothing. Barton offered a provision that would strike the utility-benefiting language, only to have that provision struck down on a party-line vote, 33-20.
Waxman’s amendment was designed after his home state’s energy plan, which uses a ratemaking scale to reward utilities when consumers conserve energy.
Bad as it is, the Waxman measure does one service: It provides early indication of the gifts and giveaways that are already being tucked into the stimulus package working its way through Congress to President Obama’s desk.
gospelance // Jan 26, 2009 at 12:51 pm
it’s just like driving a hybrid car. the only incentive is that you can smugly say, “look at me, I care.” I think this is great; this is the beginning of sorrows for the left–as they come to realize that this man they elected is not your garden-variety democrat.
Clarence Darrow // Jan 26, 2009 at 1:50 pm
This is a great story – Very important message to get out!
FamousDave // Jan 26, 2009 at 1:59 pm
“This approach removes all incentives to cut down on power use.”
The overall program may not be desirable, but there is still definitely incentive to cut down on power use for each individual. As a group, there may not be, but I doubt a group will be able to collude successfully and agree that everyone will keep their usage at the current level.
So, those who cut down on energy use may not see as large a drop in price as they hoped. But they still certainly have an incentive to cut down on use.
suey // Jan 26, 2009 at 2:24 pm
it’s a free market in action.
Chekote // Jan 26, 2009 at 5:19 pm
Excellent reporting. I hope other sites pick this story up. I will start linking to my usual hangouts. The GOP can regain its “conservationist” label but standing up to this kind of legislation instead of buying into the “Global Warming” religion.
dragonlady // Jan 26, 2009 at 5:41 pm
Talk about undoing whatever good the stimulus is supposed to do.
JoetheVeep // Jan 26, 2009 at 7:04 pm
I ever there were an ideal target for GOP ads, Henry Waxman is that, um, ideal target for GOP ads. Sure, nobody’s heard of him yet, but they could, given a solid push.
rk // Jan 26, 2009 at 9:00 pm
So what is a utility supposed to do? There is a certain fixed costs that have to be spread over the customer base. There are investors (including seniors) who expect dividends. So what is your solution? …..No doubt left to their own devices utility commissioners would in fact give rate relief to the utilities if need be even without this bill,,,,I understand that businesses want a ROI on their “efficiency” investments. ….. But I’d like to see some serious discussion of solutions to the problem.
gospelance // Jan 26, 2009 at 9:04 pm
it’s great to be non-wasteful; that’s what I was taught (not by the state, by the way) and what I now pass on to the next generation. I get uptight when my daughter fiddles around while her wash-water is running. But enough about me. The question that is always raised in my mind is: Do the believers of Global Warming (the idea that man is largely responsible) make sacrifices in their own lives by their own free will, or must they have the state tell them to???????????????? I would doubt it by about 99%—I’m out there taking the bus to work to help bring the cost of gas down, etc., and see the Prius sitting at the store with bumper stickers that are very offensive to my religion. What, they can’t get out of their car ever? Why don’t they make the sacrifice of riding public transit, instead of driving the “look at me” car everywhere????????????? Have you moved closer to work? Do you turn off the water when you shower???????? I knew some guys who did that all the time—because they were cheap. THE POINT. IMO, conservation is a natural part of conservatism. But we’re not all that way obviously by the tanks on the road. this is one of the fundamentals of conservatism. It’s up to each person to do the right thing, and should not have to be mandated by the state. Personal responsibility–recognizing the big picture.
gospelance // Jan 26, 2009 at 9:12 pm
I’ve been to the 3rd world, so I’ve seen the lack of standards first hand. I smelt smoke in the air, and asked, “was there a fire?” They just looked at me- puzzled. Well, come to find out that they burn their garbage. And they have loud obnoxious trucks driving around belching black smoke–it doesn’t even enter their mind, unless maybe they’re in the big city breathing the smog. But then, what else can they do????? Afterall, they’re on an island.
larryo // Jan 26, 2009 at 9:31 pm
rk, spoken like a true corporate apologist. If the free market is good for the rest of us – why is it not the same for the utilities? The point of reducing demand is reducing the price of the goods. The utilities will still be able to defray expenses – they got that worked out with the various public utilities commissions ages ago.
Don’t cry for corporate America – they brought this on themselves.
doodad // Jan 27, 2009 at 8:24 am
well written piece; very disappointing concept: “revenue decoupling”