Electrical Power companies are out of control

What Happened to the promises of cheap wind power? Photo: Electric Towers

YAKIMA, Wash., February 17, 2013 – Here’s something to think about.  Our power company, Pacific Power is asking for a rate increase of 14% for all customers.  That in its self isn’t bad unless you consider it in the context of the last ten years. 

Since 2003 Pacific Power’s rates have increased 85%.  If they are awarded this increase, the cost of electricity will have double over the last ten years.   This curmudgeon takes exception to this rate request.  And, here’s why.

Way back in the 1950s and 60s when I was but a lad, the electric power companies put on an advertising blitz touting “Gold Medallion Homes” that were all electric.  The claim was that electricity was efficient and cheap—real cheap.  And, it was.

Hydro-electric power was hailed as the power of the future.  It has become just that, but with a few bumps in the road.  Today the electric power industry is being blamed for polluting the atmosphere due to some power plants using coal.  Conservationists now also blame hydro-electric dams for injuring our fisheries, rivers and related forests. 

Conservation groups have suggested we go to wind power.  Wind power is a fast developing new green industry.  According to the U.S. Department of Energy, the American wind power industry has created thousands of jobs and billions of dollars to our economy.  And, the wind industry has received 42% of all Federal subsidies given to the electrical power industry.

Then what justifies rate increases to the consuming public?

Pacific Power wants a rate increase in part because it claims power usage has declined due to the economic recession and more energy efficient appliances.  What? 

What happened to the economic model of supply and demand?  When there is too much supply isn’t price supposed to go down, not up?  Boy, our world really is screwed-up. 

The rate increase request is being justified by the company because they claim they have to buy some power and that the cost of power has gone up.  What—wait a minute?

We have so many wind farms in the Northwest producing more power than we can use that the excess is being sold to the Southwest.   If we have that much power, why isn’t the price going down?

Also, the company says it needs to pay its shareholders who are critical to the success of the company because they provide the front-end investment dollars needed to build plants and buy equipment. 

Again, this curmudgeon is stumped.  I thought shareholders invested their money and then got a return from the profits the company produced.  Pacific Power is owned by PacifiCorp, which is owned by Mid-American Energy Holding Company, a billion dollar Energy Company.  Mid-American reported that PacifiCorp had a profit of 493 million dollars for the first three quarters of 2012. 

Let’s see if I have this straight, Pacific Power needs a raise in rates because consumers are using less electricity, even though less electricity is being used wholesale electricity prices have gone up, and shareholders need to get paid so they’ll keep investing.

None of this makes sense to me.  What does make sense to me is that greed is getting in the way of good business practices.   

(Larry Momo writes columns for the Washington Times Community Section and the San Pedro News Pilot.)

_______________________________

The following is the response, and views of:

Michael Goggin
Manager of Transmission Policy
American Wind Energy Association
1501 M St. NW, Suite 1000
Washington, DC 20009

 

A recent column (“Electrical Power companies are out of control,” Feb. 17), made a misguided and baseless attempt to link a utility rate increase request to wind power.

In fact, numerous studies from across the country have shown that adding wind power to the utility grid can lower consumer costs. For example, a May 2012 study by Synapse Energy Economics found that adding wind power in the Midwest could save consumers up to $200 a year on their electricity bills. Similarly, in New England, a study conducted by the region’s independent grid operator found that wholesale electricity prices would decline by more than 10% if the region generated 20% of its power from wind. 

That’s because wind energy, with its long-term fixed-rate pricing, acts as a hedge against the often volatile fossil fuel markets. When wind energy is added to the grid, it displaces the most expensive, least efficient power plants – usually older fossil fuel sources.

Most importantly, the column failed to offer any evidence for why there would be a correlation between the rate increase request and additions of wind power to the northwest electricity grid. Moreover, the column itself noted a number of other factors that are likely responsible for the rate increase request.

While it is important for consumers to be engaged in the rate making process, it is equally important that their opinions be based on solid facts and complete information, rather than unsupported conjecture.


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Larry A Momo

Larry Momo has been labeled by his family as a curmudgeon, nit picky and a complainer.  After four years in the Air Force working for the National Security Agency, Mr. Momo returned to the city of Los Angeles and attended Cerritos College and the University of Southern California.  He studied political science and accounting before taking the helm of the family business. 

Some years later, he sold the family business and moved his family to Yakima, Washington where he developed a business in micro-computers.  After sixteen years of programming, Mr. Momo accepted a CEO position of a small company near Portland, Oregon, from which he retired in 2004. 

Never one to sit around, he now works as a school bus driver in addition to his social security.  Writing and contributing to the political dialogue of our country, plus being a curmudgeon, is his developing art form.  Please read and enjoy A Curmudgeon’s View and feel free not to agree with everything written by him.  After all, he is a curmudgeon.

 

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