Electricity Fairness Act [debating]

[Bacon King]

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Sponsor: Marokai Blue
Bill Slot: 2

[Lambsbread]

Heaven forbid I live to see the day that the Government tell citizens how to use their electricity...I oppose this bill 100%.

[TJ in Oregon]

I am generally opposed to setting price ceilings unless there is a very specific extenuating case where such a ceiling is needed. Price ceilings are a market distortion that can often cause shortages and rolling blackouts rather than making more energy with less money. May I ask, what was the intent of this bill? If you believe the energy companies are benefitting unfairly, then why not address whatever loophole allows them to benefit unfairly?

I also have some question about how the government can mandate a maximum average rate instead of a flat-out maximum rate. If you mandate a certain average, presumably close to half the charges made will be higher than that average. Is that illegal if this passes?

One quick techincal point: (I apologize if this comes off the wrong way) the unit of energy is kilowatt-hours not kilowatt per hour. A watt is already per unit time, so it would be multiplied by time (in this case hours) to have a unit of energy. Also the costs should be per kW-hr, not per hour. The cost is being paid for energy, not for time.

[Napoleon]

No. Just no!

[Southern Senator North Carolina Yankee]

I fear this would lead to blackouts.

[Yelnoc]

I suggest checking this map.

Rates will need to be scaled up to match reality.  That said, population growth, inflation, and a dozen factors will naturally drive the rates upwards at some point in the future?  What happens then?  If you are going to go through with this, which I strongly advise against, it ought to scale in order to cope with changing situations.

[/peanut gallery]

[Bacon King]

I suggest checking this map.

Rates will need to be scaled up to match reality.  That said, population growth, inflation, and a dozen factors will naturally drive the rates upwards at some point in the future?  What happens then?  If you are going to go through with this, which I strongly advise against, it ought to scale in order to cope with changing situations.

[/peanut gallery]

It does scale up: see Section 1-6.

But wow, electricity in Hawaii is almost triple what I pay here in Georgia? If nothing else, I think it'd at least be good to pass the last bit of the bill.

[tpfkaw]

This is some pretty basic stuff, guys.

[Marokai Backbeat]

This is some pretty basic stuff, guys.

Regulated power, and markets with substantial public competition, have noticeably cheaper electricity than places without public competition or regulation. Public power utilities alone, provide much cheaper electricity rates than their private counterparts. Some limited amounts of such regulation exist in the country already. We haven't had "blackouts" from that, for goodness sake.

Were it up to me, our entire national electricity apparatus would be nationalized.

I fear this would lead to blackouts.

It wouldn't. It scales with time and growth fairly, and these caps are based on a slightly raised level of existing electricity rates that I had to unfortunately look up for hours before actually writing this thing. It prevents rates from skyrocketing out of control, and increases public competition. It would benefit the consumer a great deal.

No. Just no!

Neoliberal.

I suggest checking this map.

Rates will need to be scaled up to match reality.  That said, population growth, inflation, and a dozen factors will naturally drive the rates upwards at some point in the future?  What happens then?  If you are going to go through with this, which I strongly advise against, it ought to scale in order to cope with changing situations.

[/peanut gallery]

It does scale up: see Section 1-6.

But wow, electricity in Hawaii is almost triple what I pay here in Georgia? If nothing else, I think it'd at least be good to pass the last bit of the bill.

It is somewhat understandable why they would have higher electricity, considering their location, but the lack of any public competition in Hawaii allows the private power companies there to raise prices on electricity with impunity.

Fun fact I didn't know before writing this bill, though; Nebraska apparently has no private power companies. Not in the same way of other states, at least. In the 90s, the state legislators there considered reforming the system to opening the Nebraska market up to private competition, but in their review, they concluded that such a move would unfairly raise prices on consumers, and their current evil socialist system would be superior.

What I'm proposing here isn't such a radical thing. It merely restrains power prices from getting too far out of control from what they are now. And opens up a little bit more competition. That can never hurt.

[Marokai Backbeat]

One quick techincal point: (I apologize if this comes off the wrong way) the unit of energy is kilowatt-hours not kilowatt per hour. A watt is already per unit time, so it would be multiplied by time (in this case hours) to have a unit of energy. Also the costs should be per kW-hr, not per hour. The cost is being paid for energy, not for time.

Duh, you're totally right, my mistake. I don't know why that completely missed me, before. Feel free to amend it if you like.

[tpfkaw]

Well, actually, the reason why there is so little competition in electric utilities is that back in the "progressive" era, and continuing until today, many municipalities passed laws declaring electrical power to be a "natural monopoly" and therefore giving legal monopolies (occasionally oligopolies) to electrical utilities in exchange for a yearly fee or tax.  Not only did this give them the power to charge consumers with monopolistic prices, they also could pass on the entire cost of said fee or tax onto consumers, raising rates still higher.  Electrical utilities, of course, lobbied (and lobby) heavily for the passage of such laws.  One wonders - if electrical power truly is a "natural monopoly," why would electrical utilities ask for legal protection against competition?

As for nationalized electrical power, the government, of course, can sell power at any rate it wishes.  This is not because it has somehow figured out some way to create power more efficiently or cheaply than the market (my town, which has the worst of all corporatist worlds, has a substation owned by the town and power lines owned by utilities - the workers at the substation all receive between $200,000 and $240,000/year - not cheap!).  The reason why the government can sell power or anything else at any rate is because it, unlike a private company, can sell things at a loss and make up the difference by taxing people more (which creates its own deadweight loss).  Furthermore, there's an additional deadweight loss in this instance - power generation has an important negative externality (environmental damage caused by the burning of coal or natural gas - even if one is sourcing one's power from non-emissions sources that's still preventing other places from using those non-emissions sources for their power).  Charging an artificially low rate for power will cause this negative externality to grow, along with the deadweight loss (environmental damage, in this case).

Whatever the case, price ceilings are absolutely never in any scenario a good idea, and it is an iron law that a binding price ceiling will cause shortages (in this case, blackouts).  Hugo Chavez has been finding this out in Venezuela.

[Marokai Backbeat]

Whatever the case, price ceilings are absolutely never in any scenario a good idea, and it is an iron law that a binding price ceiling will cause shortages (in this case, blackouts).  Hugo Chavez has been finding this out in Venezuela.

If ever there was a case of a ridiculous comparison, you've found it!

I certainly remember reading all about those blackouts and power shortages in Canada all the time! And their power costs? Yeesh! So expensive!

[tpfkaw]

Yes, Hugo Chavez put binding price controls on power in Venezuela.  Unsurprisingly for anyone who understands very basic microeconomics based on deductive mathematical logic, there have been blackouts in Venezuela, ridiculous as that may sound.  Otherwise, I'll be content to quote myself:

As for nationalized electrical power, the government, of course, can sell power at any rate it wishes.  This is not because it has somehow figured out some way to create power more efficiently or cheaply than the market (my town, which has the worst of all corporatist worlds, has a substation owned by the town and power lines owned by utilities - the workers at the substation all receive between $200,000 and $240,000/year - not cheap!).  The reason why the government can sell power or anything else at any rate is because it, unlike a private company, can sell things at a loss and make up the difference by taxing people more (which creates its own deadweight loss).  Furthermore, there's an additional deadweight loss in this instance - power generation has an important negative externality (environmental damage caused by the burning of coal or natural gas - even if one is sourcing one's power from non-emissions sources that's still preventing other places from using those non-emissions sources for their power).  Charging an artificially low rate for power will cause this negative externality to grow, along with the deadweight loss (environmental damage, in this case).

[Napoleon]

Motion to table

[Bacon King]

Motion to table

Senators, there is now a vote on the motion to table. The vote shall last two days, or until sufficient support exists for the motion to pass or fail. For the table to be successful, two-thirds of non-abstaining Senators must support the motion.

Senators, please vote aye, nay, or abstain on the motion to table.

[Napoleon]

Aye

This probably won't be passable and it is impractical policy regardless. A bad idea altogether.

[Marokai Backbeat]

Yes, Hugo Chavez put binding price controls on power in Venezuela.  Unsurprisingly for anyone who understands very basic microeconomics based on deductive mathematical logic, there have been blackouts in Venezuela, ridiculous as that may sound.  Otherwise, I'll be content to quote myself:

As for nationalized electrical power, the government, of course, can sell power at any rate it wishes.  This is not because it has somehow figured out some way to create power more efficiently or cheaply than the market (my town, which has the worst of all corporatist worlds, has a substation owned by the town and power lines owned by utilities - the workers at the substation all receive between $200,000 and $240,000/year - not cheap!).  The reason why the government can sell power or anything else at any rate is because it, unlike a private company, can sell things at a loss and make up the difference by taxing people more (which creates its own deadweight loss).  Furthermore, there's an additional deadweight loss in this instance - power generation has an important negative externality (environmental damage caused by the burning of coal or natural gas - even if one is sourcing one's power from non-emissions sources that's still preventing other places from using those non-emissions sources for their power).  Charging an artificially low rate for power will cause this negative externality to grow, along with the deadweight loss (environmental damage, in this case).

There is absolutely nothing there that has any relevance to this debate. You and your ilk deal in theoretical neoliberal mumbo jumbo, and I couldn't give half a damn. Regulated power is cheaper in the United States. Public power is even cheaper than that. Such utilities don't suffer from crippling losses or blackouts as a result.

The government doing something is not always cheaper, or more efficient. I would never contend that. But what we're dealing in here is empirical stuff. Comparing the United States to Venezuela is a preposterous comparison. I could easily point to our neighbors to the North as a rebuttal. Nearly all provinces have public power utilities, and their power is much cheaper than ours. This is partially due to the fact that a lot of the power in certain provinces comes from hydro electricity, which is easy to produce more cheaply, but using them as an example still works.

You say public power is cheaper not because it's more efficient, but simply because the government sells it at a loss and makes up for it in taxes, which, A) Wouldn't matter even if that was the case. It would still be cheaper in most cases. and B) Is flatly not the case all the time anyway. Quebec's public power utility, Hydro Quebec, runs such a profit that they've been trying to expand their own power utility into neighboring provinces and using excess profits to pay for other government expenditures.

What I'm attempting to regulate here is unfair price gouging and reigning in the profit motive. Which on something as essential as electricity, shouldn't be the driving factor. And we're not even debating nationalization anyway, for God's sake.

[Marokai Backbeat]

Motion to table

I cannot wait until you're gone. You are a waste of a Senator.


Nay.

[Napoleon]

Cool

[tpfkaw]

If you have a binding price ceiling, there will be a shortage.  That isn't really debatable.  It is in fact a mathematical surety that a binding price ceiling will cause a shortage.  It is as sure as 2+2 equaling 4 that binding price ceilings cause shortages.  To argue otherwise is the equivalent of saying that 2+2 = 5.  Now, it may be the case that in certain places there have been price ceilings imposed, and the price has in fact fallen to the price ceiling without shortages.  But this is not because binding price ceilings work, but rather because the price ceiling isn't actually binding - that is to say that electricity is already being sold at above free-market equilibrium rates.  Why would this be?  I addressed this in my original post:  Many municipalities have granted legal monopolies to a single utility, shielding them from market competition.  When there is a binding price ceiling, as in Venezuela, there are shortages.

It is certainly possible that Hydro-Quebec turns a yearly profit.  But what is not considered on its books are the original expenses of creating the dams that Hydro-Quebec runs, which was an enormous expense that a private company would have to bear itself.  Nor are we considering the cost of the deadweight losses incurred by the taxes which paid for those dams.  Nor are we considering the deadweight loss created by the enormous ecological devastation that damming a river causes.  These deadweight losses are borne by the ordinary citizen, not the government, and so will never appear in its record-books.  Nor, for that matter, does Atlasia receive any significant portion of its electricity from hydropower.

[Marokai Backbeat]

I am desperately looking for something to actually respond to there, but your posts are seriously so devoid of anything substantive to actually latch on to that I'm really at a loss. Statements like..

If you have a binding price ceiling, there will be a shortage.  That isn't really debatable.  It is in fact a mathematical surety that a binding price ceiling will cause a shortage.  It is as sure as 2+2 equaling 4 that binding price ceilings cause shortages.  To argue otherwise is the equivalent of saying that 2+2 = 5.

.. are so padded out and meaningless that your entire post could be simplified down to "Nuh uh."

[Bacon King]

I am desperately looking for something to actually respond to there, but your posts are seriously so devoid of anything substantive to actually latch on to that I'm really at a loss. Statements like..

If you have a binding price ceiling, there will be a shortage.  That isn't really debatable.  It is in fact a mathematical surety that a binding price ceiling will cause a shortage.  It is as sure as 2+2 equaling 4 that binding price ceilings cause shortages.  To argue otherwise is the equivalent of saying that 2+2 = 5.

.. are so padded out and meaningless that your entire post could be simplified down to "Nuh uh."

Sounds like 75% of every essay I've ever written.

[Marokai Backbeat]

Perhaps Wormy is just pasting and re-purposing segments of past essays he's written in response to me, then.

[tpfkaw]

No, actually my posts are filled with substantive examples and well-reasoned explanations.  However, I am a bit at a loss with someone who is actually denying known facts - that a binding price ceiling creates a shortage.  That is day 3 or 4 of Microeconomics 101.  It is not a difficult concept to grasp.  The dumb jocks who couldn't tell a budget constraint from an average cost curve get it.  So yes, nuh uh.  Mathematical facts are mathematical facts are mathematical facts.  If you are not understanding me you can literally read the Wikipedia article on price ceilings: http://en.wikipedia.org/wiki/Price_ceiling

[Lambsbread]

Aye