Aug

31

How I have missed you. It occurs to me after a few days without power that nothing in our modern world works without electricity. I suspect power generators are much more valuable than the market gives them credit for.

Henry Gifford writes: 

Electricity is priced in a strange way, and generally thought by many to be heavily subsidized.

Roughly described, the utility company is guaranteed a % return on investment, so once a wire or power plant is paid back, it is "a sunken cost" and carried on the books as worthless.

Residential customers pay only for buying and transporting electricity they use, and for political reasons pay nothing for unused infrastructure. This is a little like telling a taxi to wait by your door all year because you might want to go someplace on New Years Eve, or you might not want to go anyplace, but you won't pay the taxi to wait at the curb all year.

"Commercial" customers pay a "demand charge" for the infrastructure capacity that is available 24 hours 365 days per year, but only fully used for a few minutes per year, often in the late afternoon in the summer, when everyone else wants it. The demand portion of the bill can exceed the electricity buying and transporting charges, and indeed many companies are in the business of helping large users shave their peak demand, sometimes by shifting it to a non-peak time.

One example is the 20+ companies in the US that manufacture ice storage tanks. Customers with large air conditioning loads make ice at night, when their demand is lower, then use the ice for cooling during the day, reducing their peak (daytime) electricity use.

Charles Pennington clarifies: 

We're categorizing water in three ways: drinking water, washing/cleaning the body water, and flushing-the-toilet water.

Sam's Club Diet Lemon-Lime Soda is a pretty good go-to for the washing/cleaning the body water. It's cheaper than most bottled water, and because it's "Diet" it has no sugar and is good for washing your hands. I guess it's not optimal for brushing teeth, but it won't be for long, I hope.
 


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  1. duncan on September 3, 2011 7:06 pm

    I agree it must be subsidized, having lived 5 days without power after hurricane Irene I can say I value my house With power greater than the several $100 per month charge. Maybe one way to look at it, if someone were to pay me a compensation to live in the same house and Not to use power it would be many multiplies higher than my current monthly rate. Of course we all want to pay less, but for me the current power bills are a good trade for what you get.

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