Follow-up from yesterday's post:
Texas state Public Utility Commission Cracks Down on Power Companies
Notable quote: "I think it is approaching a number where it is cheaper for (companies) to just write a check than it is to make the repairs," Commissioner Barry Smitherman said during a discussion of the TXU penalty.
Also note just how complicated the regulations are, just in the brief mention given by the Houston Chronicle's report. Effective? Probably not.
Would a statewide or nationwide government-run transmission system be any more efficient? Almost certainly not- but at least you wouldn't have paper-pushers levying useless fines in an effort to look like they're actually working.
Showing posts with label Natural Monopoly. Show all posts
Showing posts with label Natural Monopoly. Show all posts
Sunday, December 10, 2006
Saturday, December 9, 2006
Wind Power: Good News, Bad News
The good news: with current petroleum prices, wind power is currently competitive with other methods of electric generation even without tax subsidies.
The bad news: Congress will almost certainly renew those subsidies next year- despite the fact that wind power companies no longer need them to be competitive.
Here's the Houston Chronicle's article on the subject.
Note the following numbers in the article:
COAL FIRED ELECTRICITY: 4.2 cents per kilowatt-hour
WIND POWER (subsidized): 4.6 cents per kilowatt-hour
WIND POWER (without subsidy): 6.0 cents per kilowatt-hour
NATURAL GAS FIRED ELECTRICITY: 6.8 cents per kilowatt-hour
The article also goes on to note infrastructure costs are fairly high for wind power. Viable wind generation sites are limited to remote areas- deserts, plains, or offshore sites- all of which require long-distance transmission wires to be installed. Furthermore, the high cost of wind turbine construction has caused a bottleneck for expansion of wind generation projects, making them more expensive. These, plus the call to make electric generation affordable for all, are the justifications cited for the tax credit.
HOWEVER.
If an industry is so successful that it has maxed out its ability to expand... why does that industry need tax dollars to survive?
As for transmission line costs... the same argument should apply to rural electrification projects, including the one I live on. Yes, I indirectly receive a government subsidy- because electric service to my area would never have been profitable without a massive initial government outlay. Even now my electricity comes not from a commercial provider, but from the regional co-op that owns the electric lines. In many, if not most, places the electric wires are run on publicly acquired rights of way, but the wires themselves are privately owned. This has led to monopolies in the past and mind-boggling regulations today.
There's a very simple solution to this. We have government owned roads to rural areas so that people who live and work there can get goods to and from the market- enriching all. We have government operated sea ports and airports for the same reasons. Let's extend this public service to transmission infrastructure- in short, publicly owned electric wires. Charge the electric companies a tax per kilowatt hour for maintenance- say, a nickel per- and let anyone with generation capacity into the market. This simplifies the current absurd regulations that try (and fail in many cases) to make the current private infrastructure open to competition- while opening that competition wider than ever.
The anarchists in the Libertarian Party, of course, would never go for this. In fact, there are some who with a straight face call for all public roadways to be auctioned off to the highest bidder- immediately. I don't know about you, but I'd rather not pay a $5 toll just to leave my driveway... and I don't like the "toll" electric companies charge for the use of their wires. This is a case where monopolies will exist UNLESS government acts... and I'd like to abolish all natural monopolies in such a manner.
But in the meantime, let's stop giving taxpayer money to companies owned by Goldman Sachs, hm? Subsidies are only justifiable as a temporary assistance to growing industries which, without them, could not get started. Wind power has its feet under it now- in fact, it's growing by leaps and bounds. It's time to get Goldman Sachs and other investors in wind power off the Welfare rolls... for a start.
The bad news: Congress will almost certainly renew those subsidies next year- despite the fact that wind power companies no longer need them to be competitive.
Here's the Houston Chronicle's article on the subject.
Note the following numbers in the article:
COAL FIRED ELECTRICITY: 4.2 cents per kilowatt-hour
WIND POWER (subsidized): 4.6 cents per kilowatt-hour
WIND POWER (without subsidy): 6.0 cents per kilowatt-hour
NATURAL GAS FIRED ELECTRICITY: 6.8 cents per kilowatt-hour
The article also goes on to note infrastructure costs are fairly high for wind power. Viable wind generation sites are limited to remote areas- deserts, plains, or offshore sites- all of which require long-distance transmission wires to be installed. Furthermore, the high cost of wind turbine construction has caused a bottleneck for expansion of wind generation projects, making them more expensive. These, plus the call to make electric generation affordable for all, are the justifications cited for the tax credit.
HOWEVER.
If an industry is so successful that it has maxed out its ability to expand... why does that industry need tax dollars to survive?
As for transmission line costs... the same argument should apply to rural electrification projects, including the one I live on. Yes, I indirectly receive a government subsidy- because electric service to my area would never have been profitable without a massive initial government outlay. Even now my electricity comes not from a commercial provider, but from the regional co-op that owns the electric lines. In many, if not most, places the electric wires are run on publicly acquired rights of way, but the wires themselves are privately owned. This has led to monopolies in the past and mind-boggling regulations today.
There's a very simple solution to this. We have government owned roads to rural areas so that people who live and work there can get goods to and from the market- enriching all. We have government operated sea ports and airports for the same reasons. Let's extend this public service to transmission infrastructure- in short, publicly owned electric wires. Charge the electric companies a tax per kilowatt hour for maintenance- say, a nickel per- and let anyone with generation capacity into the market. This simplifies the current absurd regulations that try (and fail in many cases) to make the current private infrastructure open to competition- while opening that competition wider than ever.
The anarchists in the Libertarian Party, of course, would never go for this. In fact, there are some who with a straight face call for all public roadways to be auctioned off to the highest bidder- immediately. I don't know about you, but I'd rather not pay a $5 toll just to leave my driveway... and I don't like the "toll" electric companies charge for the use of their wires. This is a case where monopolies will exist UNLESS government acts... and I'd like to abolish all natural monopolies in such a manner.
But in the meantime, let's stop giving taxpayer money to companies owned by Goldman Sachs, hm? Subsidies are only justifiable as a temporary assistance to growing industries which, without them, could not get started. Wind power has its feet under it now- in fact, it's growing by leaps and bounds. It's time to get Goldman Sachs and other investors in wind power off the Welfare rolls... for a start.
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