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The relationship between local utility regulators and local electrical utilities has always intrigued me. In some states, these regulators are appointees. In others, as in my home state of AZ, they are elected officials given little regard. But they have immense power and authority. The job of these regulators is to oversee local utility monopolies and scrutinize their applications for rate increases. I know that this is a flawed process, far from the efficiency of a competitive market, but this is the process nonetheless. (If you wonder whether this kind of oversight works, let me remind you that in 1980, it was commonplace to pay Ma Bell $1.25 per minute for a long-distance call. That price has dropped to zero since the break-up of the telephone monopoly.)
The utility oversight process is hardly apolitical. But in recent years, with the politicization of global warming/climate change, these regulatory bodies have become self-appointed climate czars, mandating that the utilities under their oversight meet aggressive “renewable energy” production goals. AZ recently mandated 100% “clean” energy by 2050.
This is clearly an aggressive goal, an incredible goal, with similarly aggressive benchmarks along the way, goals set by a small cadre of small-time politicians who are neither utility experts nor economists. Whether or not it is even realistic or justified to mandate these kinds of changes is an open question. These regulators are global climate change zealots, no doubt, and yet, the media says little. The media does not question these mandates on any level. There is no room for apostasy in the worship of global climate change. People are uninformed and apathetic as a result.
And what about those entities that must meet these mandates, the utilities themselves? Surely they are appalled; yet, where are their complaints? We hear naught but a whisper. And why is that?
Let’s start with the numbers. According to US Energy Administration estimates, the US electrical infrastructure, regulated utilities all, at peak can produce 11 billion KWh (kilowatt-hours) of electricity a day; an estimated 6% of that energy is lost in transmission and distribution. A mere 9% of that power is said to come from wind and solar (provided the wind is blowing and the sun is shining.) This capacity is generally capable of meeting demand, though each year there are problems meeting demand in certain pockets, especially when there are transient problems with generation or transmission coupled with increases in demand.
There are some 276 million automobiles in the US and some 37 million commercial trucks. If every car and truck in the US is replaced with a plug-in, this new electric fleet would likely use some 4.5 billion KWh per day, perhaps more. That represents 41% of the total current electrical grid capacity. It also represents 4.3 times the current electricity produced daily by solar and wind sources, the so called “renewable” sources.
Local utility monopolies are more than willing to accept whatever mandates the regulators set in return for the growth associated with a migration of a minimum of 4.5 billion KWh of energy per day from the oil industry. The play, you see, is the domination of US energy, whatever its source, by the utility monopolies. These monopolies do not have to worry about competition nor of capital. Their prices, approved by the climate change zealots on local utility regulatory authorities, include both guaranteed profits and cash flow for mandated capital expenditures, debt service and even shareholder dividends for those private utilities that are not municipally owned. These utilities also know that if the mandates are impossible to meet, if they are simply unrealistic, that they will be forgiven and allowed yet more time and money to meet these goals. That’s how the system works.
In the end, the ratepayers will fund these mandates, one way or another over the course of this migration. And the market for oil and gas will be ruined. Unaccountable local utilities will take over the market for transportation energy. All this is based upon a highly controversial, legitimately debatable, contentious, and questionable theory of ruination caused by man-made climate change. I should point out that many of these utilities are not for profit, government-sponsored corporations, so this migration is in great part a government takeover of the market for transportation energy. It is also important to note that utility companies, public sector or for-profit, are largely union shops.
Ratepayers are citizens and local businesses and they will bear the costly burden of this transformation. Don’t be surprised if the home heating market is next. I expect that soon, the regulators will turn their attention to the conversion of the home heating market from oil and gas to electricity, all in the name of global climate change.
The electrification of the US transportation industry is a racket, a gift, and a scandal and it is happening right in front of our eyes. It’s time to start setting off alarms.Published in