The Great Gas Grift

 

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 Economics
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  1. OmegaPaladin Moderator
    OmegaPaladin
    @OmegaPaladin

    If you promote clean energy, and don’t promote nuclear energy, you are not a serious person.

    Solar and wind are mostly for virtue signaling, not actually running things.  They make power grids less stable.

    • #1
  2. Jim McConnell Member
    Jim McConnell
    @JimMcConnell

    If you are an elected or appointed government official, it is easy to author highly technical and sweeping new technologies; it takes only the stroke of a pen. Implementing them may take a little more thought and work.

    • #2
  3. DonG (2+2=5. Say it!) Coolidge
    DonG (2+2=5. Say it!)
    @DonG

    Doug Kimball: The electrification of the US transportation industry is a racket, a grift and a scandal and it is happening right in front of our eyes. 

    Yeah, but that new electric Hummer is a bad ass!    Anything more than 5 cents per Kwh, is going to waste fraud and abuse.  My city charges me about 16 cents per Kwh or more.

    • #3
  4. Jerry Giordano (Arizona Patrio… Member
    Jerry Giordano (Arizona Patrio…
    @ArizonaPatriot

    Doug, I admit that I haven’t been following this story.  Do you know the details about the adoption of these new rules in Arizona?  As I understand it, the mandate was passed last year when the ACC (Arizona Corporation Commission) had a 3-2 Republican majority, and the Republicans still have a 3-2 majority after the 2020 election.

    What Republican(s) supported this change?

    Correction: In my further investigation, it appears that the Republicans had a 4-1 majority on the ACC before the 2020 election.  Matters are worse than I thought.

    On the bright side, it looks like the legislature is considering reversing the decision, apparently with the governor’s support, and there may be a basis for a successful court challenge to the ACC’s authority to regulate in this area.

    • #4
  5. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Jerry Giordano (Arizona Patrio… (View Comment):

    Doug, I admit that I haven’t been following this story. Do you know the details about the adoption of these new rules in Arizona? As I understand it, the mandate was passed last year when the ACC had a 3-2 Republican majority, and the Republicans still have a 3-2 majority after the 2020 election.

    What Republican(s) supported this change?

    All but 1.

    • #5
  6. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    OmegaPaladin (View Comment):

    If you promote clean energy, and don’t promote nuclear energy, you are not a serious person.

    Solar and wind are mostly for virtue signaling, not actually running things. They make power grids less stable.

    This

    • #6
  7. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Typical of most Democrat objectives, this grift satisfies multiple Democrat constuencies.  1. It punishes the hated oil industry, puts it out of business  2. It moves free market activity into the government sector, placing politics ahead of market forces, increasing government influence and power  3.  It creates opportunities and growth in utility and municipal workers unions  4. It gives government more control and leverage over transportation energy pricing through the rate setting process and regulatory action (control and leverage = power and contributions to Democrats) 5.  It provides municipal and state governments who rely on utility based taxes with increased tax receipts, making them allies with Democrats in the grift.  6. And finally, it provides Democrats with a massive opportunity to garner additional contributions from captive utility and municipal worker’s unions who domimate the industry.

    • #7
  8. Front Seat Cat Member
    Front Seat Cat
    @FrontSeatCat

    What is weird is that every president runs on the fix the infrastructure mantra, but no one does it. So where has all the money gone and why hasn’t it been fixed, or has it? Cities and towns are putting in new gas lines (my sister’s town), new water lines, we have a major highway project that’s been milked out going on 4 years and still going.  The big ticket price and goals of the Biden administration is I think in lock step with the goals of the World Economic Forum – The Great Reset – The Build Back Better plan, which is all tied together under the alarming Climate Change news.  

    If you research through it’s many layers, you’ll see more than energy, but changes in food (replacing meat with plant-based products, etc. The self-driving car will take you out of the driver’s seat. There is all the social change policies we are witnessing – the new “stakeholder” capitalism, hiring practices, etc. Companies and banks now have scorecards (social credit scores).  Governments are taking their cues from here.  Big solar farms are going up everywhere – here in FL for sure, replacing farm land.  In the meantime, Bill Gates is buying tons of farmland (?). Solar products are made in China although “assembled” here. These changes are being rolled out fast.  

    Our electric co is a co-op. They are very good and our energy is already cheap compared to Ma where we used to live. We need infrastructure overhaul, but unless there is a plan within the local communities, I think the money “finds” other avenues and things stay the same -no accountability.

    • #8
  9. EJHill Podcaster
    EJHill
    @EJHill

    Doug Kimball: (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.)

    Breaking AT&T’s monopoly on long distance had nothing to do with that.  Technology made the long distance call obsolete, not the DOJ. All they did was kill the company. Today’s AT&T is, in reality, one of the Baby Bells that grew up to devour its parent. 

    The trust-busters are usually about 20 years behind the curve. They broke up the movie studios right before television did them in, too. 

    • #9
  10. American Abroad Thatcher
    American Abroad
    @AmericanAbroad

    It is heartbreaking to see beautiful landscapes marred by giant wind turbines.  At some point in the distant future, reason might prevail and we will adopt more nuclear power.  I really don’t see the downside of nuclear, and it will allow all sides to declare victory.  Low carbon emissions for the global warming crowd, and cheaper electric bills for the 99% crowd.  It might take a couple more decades, but even environmentalists need to plug in their Teslas.  

    • #10
  11. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    EJHill (View Comment):

    Doug Kimball: (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.)

    Breaking AT&T’s monopoly on long distance had nothing to do with that. Technology made the long distance call obsolete, not the DOJ. All they did was kill the company. Today’s AT&T is, in reality, one of the Baby Bells that grew up to devour its parent.

    The trust-busters are usually about 20 years behind the curve. They broke up the movie studios right before television did them in, too.

    Monopolies inhibit innovation and MA Bell was the biggest and baddest of monopolies.  Free of her iron grip, our digital world has evolved and telecom, data and entertainment have merged.  JMHO

    • #11
  12. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Also, AT&T today is completely different than the old MA bell.  AT&T post breakup was just the long distance portion of the original company.  No Bell Labs (Lucent), no Western Electric (tech manufacturing) and no baby bells (dozens of companies).  It was just a fraction of the old MA Bell.  Yes, some of the baby bells have been allowed to re-consolidate and some have further divested their local service. Century Link is largely made up of local service assets purchased from former Baby Bells.  Rival companies (Level 3, Qwest, WorldCom, Sprint, GTE and many others) came and went, gobbled up by the remaining Telecoms.  Cable companies became a part of the mix, offering competitive services.  The entire industry has gone through massive change, failure and consolidation,  The remaining giants, Verizon, (ne0)AT&T, CenturyLink, and TMobile/Sprint, dominate the current landscape.  Killing AT&T is probably the most important thing that led to the rise of technology in our lifetimes, more important than the development of the ethernet (an AT&T innovation).

    • #12
  13. Basil Fawlty Member
    Basil Fawlty
    @BasilFawlty

    Doug Kimball: According to US Energy Administration estimates

    US Energy Information Administration?

    • #13
  14. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Basil Fawlty (View Comment):

    Doug Kimball: According to US Energy Administration estimates

    US Energy Information Administration?

    Yes.  That’s it.

    • #14