Public Fuel and Power Act of 2014 (Final vote)

[President Tyrion]

Since it is apparent we are going to move forward with this, can someone explain to me how foreign energy companies will operate in a hypothetical Atlasia where our domestic energy corporations are nationalized? Will they still be allowed to do business in this country and compete with Atlasia? Or will they be forbidden to operate here?

I would oppose outright protectionism, but I'd like to see foreign competitors priced out. That would mean a somewhat different plan than what was proposed, though, considering I'm not sure that the original plan could keep costs down.

This is me speaking, and not the administration, although the President has made somewhat similar comments.

[Fmr. Pres. Duke]

Since it is apparent we are going to move forward with this, can someone explain to me how foreign energy companies will operate in a hypothetical Atlasia where our domestic energy corporations are nationalized? Will they still be allowed to do business in this country and compete with Atlasia? Or will they be forbidden to operate here?

I would oppose outright protectionism, but I'd like to see foreign competitors priced out. That would mean a somewhat different plan than what was proposed, though, considering I'm not sure that the original plan could keep costs down.

This is me speaking, and not the administration, although the President has made somewhat similar comments.

This is why I have such concern over this bill. If we cut out foreign energy corporations, we cut out a big chunk of supply, which will cause costs to go up domestically and in turn rates. If we allow them to operate in this country, there is a chance they will offer lower prices than our nationalized energy corporations due to their lower labor costs, and then this whole endeavor will be a massive loss in our budget, and we can't really afford it.

The profit margins in this industry are already in the single digits, which is why it's going to be difficult to really lower costs when labor costs will certainly increase as millions of workers will become federal employees. If we cut out foreign competition entirely, we risk catastrophes if there is a shock in energy markets or massive blackouts in the event we lack the ability to provide enough energy to people during peak demand seasons.

These are my concerns, and I honestly thank you for taking the time to answer them, because many of the questions have fallen on deaf ears so far. I am not opposed to having the government step in when there is a market failure in a specific industry, but I fail to see why any of this is needed aside from TNF's understandable desire to nationalize all industry. If the margins were 15-20% or there was evidence of price gauging, I'd be more open to this idea. The way I see it is, there are other ways to help the poor who have trouble paying their gas/power bills than this.

Also, what is stopping these companies from simply reincorporating overseas to avoid nationalization in the first place?

[Simfan34]

There is also the question of how we "price out" foreign competition. Massive subsidies come to mind, and in that case, I imagine we'd be footing the bill. Unless you had something else in mind.

[Fmr. Pres. Duke]

I really can't fathom how we'd price things much lower than they already are, and effectively pricing out everyone else would likely cause this whole thing to operate at a loss.

With all of that said, I'll wait for the next debate, and I plan to be more active in it than I was this one!

[President Tyrion]

Well, I think there are couple issues at work here:

1. My desire for some form of nationalization isn't borne specifically of profit margins. 8% or 15%, I'd support nationalization either way. I say this pretty often, but nationalization is about correcting the oligopoly to me. And 8% isn't razor thin, either.

2. I don't hold any misconception that a nationalized [insert whatever industry here] would have difficulty being profitable if we want to keep consumer costs down. I also don't really have any particular belief that they HAVE to be profitable with no room for error. I think that this specific issue is in the public interest enough that minor shortfalls are justified. With that said, literally no revenue from this project would be untenable, to say the least.

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In some manner, the corporate tax laws which you helped pass will help us frown upon that very strongly, although it's not as strong a disincentive as I might hope.

[Southern Senator North Carolina Yankee]

Comrade TNF, the rules require a 24 hour vote change period for all votes that are not unanimous unless time has expired beforehand and it was started on the eleventh.

Reluctant Nay

As much as I want some kind of altnerative distribution network this is far too complex and whilst bore improved it I think it still contains provisions that will be hard to manage or otherwise problematic and would detract from the benefits of the providing an alternative setup.

For nearly five years now, people like myself have been looking to you, Senator Yankee, for leadership. I find it hard to believe that now, you oppose this bill only "reluctantly". That you feel such towards this utter catastrophe of legislation, that I find difficult for any thinking person to support, much less a self-declared conservative to regard with anything less than total and absolute opposition, is both shocking yet unsurprising. After all, your party, or at least several members of it, chose to hand the presidency to the man who now seems set upon signing this bill into law.

The fact that we are here today facing this predicament, is a heavy mark upon all of us who oppose the propagation, not to mention the implementation, of such complete nonsense as this, and it is a mark strongly made on people like yourself who seem to acquiesce to it. If there is a time to stand up and shout "NO!" I daresay now is that time, particularly for those who have made a name for themselves as leading voices. I understand you are facing challenges, and I wish you well. But that does not mean you must not resist calamities as strongly! Where is your voice?

This current text is so, but I meant that I would like some kind of alternative system that would compete with what are at present monopolies, but this doesn't do that. It replaces one with another and has a large array of problems obviously.

[Southern Senator North Carolina Yankee]

I'm not entirely sure, but is there a way to resume debate without having to put this through the queue again and waiting it out, Yankee? I seem to recall us having done something like this in the past.

You can stop a finalvote for any reason as long as you give a 72 hour objection period (might be 48 but I cannot remember offhand) afterwards.

[Fmr. Pres. Duke]

Well, I think there are couple issues at work here:

1. My desire for some form of nationalization isn't borne specifically of profit margins. 8% or 15%, I'd support nationalization either way. I say this pretty often, but nationalization is about correcting the oligopoly to me. And 8% isn't razor thin, either.

2. I don't hold any misconception that a nationalized [insert whatever industry here] would have difficulty being profitable if we want to keep consumer costs down. I also don't really have any particular belief that they HAVE to be profitable with no room for error. I think that this specific issue is in the public interest enough that minor shortfalls are justified. With that said, literally no revenue from this project would be untenable, to say the least.

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In some manner, the corporate tax laws which you helped pass will help us frown upon that very strongly, although it's not as strong a disincentive as I might hope.

I guess my overarching point is, if the margins currently are around 8%, and we factor in the startup/acquisition costs, the increasing labor costs, and the potential drop in supply we could see if foreign sources of energy are barred or leave this country entirely, that 8% margin is gone. We could be looking at an increase in rates in this scenario. If we want to drop rates, we are looking at operating this whole thing at a loss, which isn't a smart decision, at least in my eyes. This is where my concern lies and why I am having a hard time understanding why this is necessary.

As for my tax bill we passed a while ago, you're right, there is nothing that forbids these companies from reincorporating overseas to avoid being nationalized. We have no laws on the books forbidding that, and I don't think such a law could ever be enacted that forces a company to remain here. All it did was end the double taxation under our previous system and only taxed revenues derived from business in Atlasia. If all of these energy companies reincorporated overseas, we'd just lose additional revenue.

If we are nationalizing for the sake of nationalizing, then that's okay, I won't pry any further because the goal is simply to nationalize, and I likely will never be satisfied in that event.

I am fine continuing to debate this issue, and I look forward to seeing what the next proposal is or how the senate changes this current one, but I am still firmly opposed to it for now for the reasons listed and the questions I have asked. If that makes me a 'right winger' in the eyes of everyone, it is a cross I will have to bear.

[Fmr. Pres. Duke]

Oh, and another question. Hypothetically, if we nationalize and operate right at cost, meaning we see zero profits, how will we ever upgrade our energy infrastructure? Power grids? R&D for future technology? It seems like people are not taking into account that many of the profits these companies make are invested back into the business to keep things modernized and to develop new methods to distribute energy or to better our efficiency. All of the money for that goes away if this goes through.

[Southern Senator North Carolina Yankee]

Keep in mind that Smart Grid Act thing we passed. I think you were here then but
I cannot recall, Duke.

[DemPGH]

It baffles me that people don't think outside of a private enterprise system. The thing is, when we nationalize an industry like energy WE make the profit. We'll raise massive amounts of money, so instead of it going to an elite group of shareholders, it goes to us, and the onus is on us to spend and invest the money wisely to keep prices down. I presume that the proposed AEA would do that.

We're not talking about foreign companies; we're talking about Atlasia and Atlasian resources. We could create national companies if we wanted to and nationalize the ones that are here now.

The government can cull resources. Why could the private system improvise and innovate and not a national company? Don't we have access to the same minds, the military, and the same scientists? I sure as hell think so.

If we nationalize, it will be far easier to oversee environmental safety and regulation as well.

[Fmr President & Senator Polnut]

Just a question then.

If you're going to place a ceiling on costs, then how do you generate profits that keep up with wages, R&D and maintenance? Let alone any increases to the grid?

As I've said time and again, I don't oppose nationalisation of essential services, I do oppose this approach, which is based on just assuming everything will turn out right in the end. Duke raises a number of serious questions about the viability of this being done in this fashion.

How about we wait for actual numbers from Napoleon?

Also... would we be exporting oil or gas to other countries to generate revenue? Then we'd need to consider global trading obligations and the impacts of the price ceiling.

[Fmr. Pres. Duke]

I just feel like no one is reading my posts or simply does not understand what I am asking.

We will not raise massive amounts of money with this venture, and anyone that believes that to be the case simply does not understand a thing about economics. I need to see if we understand what is going on.

First of all, everyone understands the government is going to have to pay at least market value for these companies, correct? We aren't just "taking them over" for free.

Second, everyone understands that these companies make, on average, about 8% profit, right?

Third, everyone understands that once all the workers are unionized, wages will go up, and in turn, costs will increase, correct?

Fourth, I am not sure what "enterprise system" means, but these facts will reign true if the government purchases these companies or someone else. The government still operates using the same revenue/cost structure private companies do, the only thing different is it can run deficits. If we are okay at operating this at a loss, then let's say so and move along.

As for the innovation question, the private sector has long out-innovated the government, which is usually the last ones to adopt newer technology. But I'm not even arguing that. I am arguing that we won't have the money to invest in R&D and maintenance if we are selling energy at cost, because we won't have any profits to invest in it. This isn't rocket science, guys.

[President Tyrion]

To some extent, Duke, I actually agree with you.

It is utterly impossible for me to see a scenario in which we aren't burning a ton of money in the short term to make this a reality. But, at the end of the day, and you're going to hate this, I do not have the same issues as you do about operating at a loss. I am fine with minor losses, if that means lower prices for the end-user. If the losses themselves only manifest in lower cost-to-consumers, then you're really looking at a normal public sector, along with a stimulus package (in the sense that the lower utilities costs put money in consumer pockets, similar to the manner in which a direct-to-citizens stimulus might). So, in that manner, I'm not wholly opposed to losses on principle.

[Fmr President & Senator Polnut]

Operating at a short-term loss is fine, a lot of businesses have to. But there's a difference when it comes to long-term viability across the board if you're operating at a loss. The shortfall to operate has to come from somewhere.

[HagridOfTheDeep]

And if we admit that we'd be operating at a loss, we circle back to the previous concern regarding innovation in the energy sector. What drive will there be to invest in R&D for new projects? Where will the money for those investments come from?

[President Tyrion]

And if we admit that we'd be operating at a loss, we circle back to the previous concern regarding innovation in the energy sector. What drive will there be to invest in R&D for new projects? Where will the money for those investments come from?

Any reasonable budget would include research into increased operation efficiencies. Admittedly, this is another cost, but...

Operating at a short-term loss is fine, a lot of businesses have to. But there's a difference when it comes to long-term viability across the board if you're operating at a loss. The shortfall to operate has to come from somewhere.

plenty of government services operate at a loss, and will continue to do so, if their societal value is rated to be more necessary than financial viability.

[Fmr President & Senator Polnut]

I'm sorry, that's not what I'm saying.

I'm saying running at a perpetual loss, noting that each year doesn't reset to $0, puts tremendous pressure on the entity's ability to operate. Full stop. I'm not saying a loss-making venture has more "value" than a profit-driven one. I'm saying its viability, in other words, its ability to actually function and service the public's essential needs, is placed in jeopardy if it runs at continual losses.

If that happens, I assume the Government will step in to cover losses and the costs of grid development and maintenance.

Again, this isn't pro-nationalisation v pro-profit. Which I know some are trying like hell to make it, it's actually asking the fundamental questions as to whether this is a short-term viable option or not. Speaking only for myself, as a voter, none of those pretty reasonable questions, considering the immediate costs and possible risks to service provision and the Governments financial position have actually been addressed.

[Fmr. Pres. Duke]

At least someone admitted they are ok at operating at a loss. Of course, when you decide you're going to do that, if the losses become too great, you have to start cutting back to the point where the public is actually hurt far more than it would have been should the nationalization never had taken place. You see shortages, lack of innovation due to lack of money, the list goes on. When this occurs, foreign energy corporations will step in and take business away from the federal power/fuel/whatever company, and then the losses can be infinite, putting pressure on the budget until we finally privatize it again like many countries around the world have done from the brief research I have done. If we ban foreign energy corporations from operating here, then millions will just be without energy sources due to shortages.

There is little evidence to suggest the public will benefit from this change long term or even short term unless we take a massive hit in our budget.

[Simfan34]

And of course it must be remembered that this is an industry presently operating at a profit; we'd be turning that profit into a loss. Since I know the VP-designate does not share the view that this legislation is necessary due to the inherent evil of private ownership, what, may I ask, are the motivations for your support? Is it to lower costs? If so it must be considered that utility costs in this country are considerably lower than elsewhere, for a number of reasons. So the concerns some seem to have (feel free to correct me if I'm putting words in your mouth) about high prices seems unfounded.

I would differ from Polnut in saying that this is a matter of private enterprise vs. nationalization. Unless we are to simply acquiesce to the PPT's view of things on the matter, there hasn't really been a clear case laid out for the need for not just a move as sweeping and drastic as this, but any sort of new large-scale state intervention in the energy sector. Perhaps it is just me, but it would be better if we were to definitively establish the problems with the energy sector we want to address, determine if nationalisation is the best possible solution to those problems, and then we can discuss, if it is what we have to do, what form the plan would take. It's a matter of not putting the cart in front of the horse.

[DemPGH]

The objective is to tap into the profits that they make so as to redirect, invest, etc. that money, which will drive down cost. In the short term we might lose money, but not in the long term. I don't see how running the energy sector will result in long term losses anymore than running a casino provided that someone is actually directing it.

And Simfan, the case HAS been made, you just don't accept it.

[Simfan34]

Simfan, the case HAS been made, you just don't accept it.

Let us assume I have a thick skull- that I am wholly to blame for not getting it. Let us take that as a given. I understand that the problems stated with the energy sector at present to be:

1. Prices are too high, possibly in part because of "price gouging by capital".

Now, my simple mind and me are at a loss here. How have we come to the conclusion that prices are too high? Compared to what? Elsewhere? Let me pull out a few easy-to-read (I assume) charts comparing international electric rates.







Now perhaps it's just me being daft, maybe I can't read graphs correctly, but it would seem that electric rates in this country are dramatically lower than all but a handful of countries. Even in New York, people freaked out when the Con Ed rate spiked to 29.13 cents (that's 31.25 Australian cents, for the first chart). On a good day that might be around 20-22 cents. So I'm still left wondering by what metric that electric prices are too high.

2. It is a necessity that we achieve the lowest possible prices for energy due to its crucial role in industry. The existence of profits precludes this from happening.

I'm left wondering if my economics professors (not to mention textbook authors) were economic
illiterates, because as far as my "education" would lead me to conclude this is nonsensical. As I already pointed out (I assume incorrectly?), electric rates in this country are lower than in all but a handful of countries. As I pointed out before, electric utilities are getting very modest net profits in the range of 6-8%.

This is not "profit gouging", by any standard. Nationalisation and the elimination of profits would give us, at the most optimistic of guesses, and not factoring the explosion of costs that nationalisation would bring, a 4% decrease in rates. Are you telling me all this is necessary just to a shave a few percentage points off our already low energy rates? That millions of The People are being kept out of work because energy rates are something like (and remember this is a very liberal estimate) 5% higher than they would otherwise be? I find that completely absurd, but then again, as I said, we are assuming I am stupid.

Now, because I am so dull, I will take the inherent evil of profits as a given despite my inclination, certainly idiocy, to believe in no such thing. But, as Presidents  Duke and Polnut have been saying, profits are necessary, at the very minimum, to fund future capital projects, to build cash reserves to fund potentially unforeseen expenditures or otherwise cover losses, and to maintain general financial health. So they would be a "necessary evil."

3. A lot of poor people have difficulty affording fuel and electricity.

This is true, even I can tell you. But then this goes on to the second question we have to answer, what is the best way to address this particular problem?

4. Energy must be owned by the public and not the private sector.

I am far, far too unintelligent and lack the intellectual capacity to comprehend this. It is like trying to explain new research in quantum mechanics to a farmhand. I am simply far too ignorant to even begin thinking about how I might try to ever possibly understand.

I'm sorry for the tone here, but you have insisted I refuse to "accept" the case that has supposedly been made for whatever reason, when I don't see any such thing, much less a compelling one. You've acted as if the reason is so obvious that I would really have to either be willfully ignorant or downright stupid to not see it. This is the question that needs answering first and foremost, before we squabble about the structure or operation of a hypothetical state-owned energy utility.

What we are now doing is akin to discussing the particulars of engineering a large suspension bridge across a river, when we haven't ascertained not just if a suspension bridge is the type best suited to crossing the river when it could, for all we know, be shallow, but also if the river even exists at all. Let's figure out if there's a river first before debating the merits of the suspension bridge.

[DemPGH]

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That I'm interested in, and it's worth looking into. I fear it depends upon where one gets one's information, though. That's because there are a lot of factors and variables.

Simfan, I think you know I was not inferring that you are stupid. I think you know that I meant that you simply disagree with the myriad number of reasons that have been given. Nevertheless, I gave you a specific reason - tap into the profit pool and redirect and invest that money, and how did you respond? A tangent on rate comparisons and an insinuation that I think you're stupid. Not so. I also think this is a resource that should belong to the citizens, not a corporation. That's another reason. 

Sigh. Okay, I'm done and out. This conversation can serve no purpose any longer. I'll await a new bill, assuming that there is to be one, and proceed from that point.

[Deus Naturae]

Alright, so what is the goal being advocated at this point? To reduce costs (in which case, to what level?) or to transform the energy sector to 100% renewable power? Or to restructure the sector so that it's run by regional and local sub-units operated by randomly selected residents and union representatives? As I've point out many times previously, the latter two goals don't really mesh well with the former. Also, I hate to keep bringing this up, but you really have to answer the questions about distributed generation and peak demand management. Both of these things are pretty huge aspects of the energy sector.

Also, I just realized, why combine fuel and power under one authority at all? Generating electricity doesn't really have anything to do with refining petroleum into gasoline.

[Simfan34]

Let ask one more time. Why is this necessary? To tap into the profit pool? I have said there is no deep profit pool. Rates are pretty low already. It's not as if we're suffering from high rates and need relief.

Or is it because, as you said, "this is a resource that should belong to the citizens, not a corporation"? If this is for purely ideological reasons, an opposition to private ownership, then let's stop beating around the bush (sans TNF, who isn't) and make that clear. I can't really counter that, so if that's how you all feel then let's stop dancing around trying to lower costs, increase usage of renewable energy, or anything like that, and just be open about it.