Don’t buy our product

posted on July 20th 2011 | 0 comments

The business of electric utilities is to provide reliable, affordable, and (increasingly) clean electricity—except when it is not. Con Ed recently started a campaign extolling the virtues of saving electrons. Imagine a business that runs ads telling customers not to buy its products.

ConEd hasn’t suddenly found religion. It has found regulators that try to decouple revenue from sales and essentially tell the company how much electricity it can sell.

In hot summers, when demand for air conditioning goes up, ConEd is obliged to pay refunds to customers for selling too much of its products. (Hence the ads.)

When demand for electricity is unexpectedly low, ConEd will be able to collect a surcharge from its customers. You can bet the ads will stay up then, too, encouraging everyone to conserve even more.

Lest anyone screams “socialism,” this convoluted regulatory construct tries to make up for the fact that electric utilities often print money like monopolies and—most significantly—carbon has no price to begin with, leading all of us to consume more electrons than would be the ideal market outcome.

Until Washington manages to find a way to limit carbon and price carbon emissions, we will see many more regulatory constructs like this that make little sense other than for the fact that our climate policy (or lack thereof) makes no sense.

The business of electric utilities is to provide reliable, affordable, and (increasingly) clean electricity—except when it is not. Con Ed recently started a campaign extolling the virtues of saving electrons. Imagine a business that runs ads telling customers not to buy its products. ConEd hasn’t suddenly found religion. It has found regulators that try to decouple revenue from sales and essentially tell the company how much electricity it can sell. In hot summers, when demand for air conditioning goes up, ConEd is obliged to pay refunds to customers for selling too much of its products. (Hence the ads.) When demand for electricity is unexpectedly low, ConEd will be able to collect a surcharge from its customers. You can bet the ads will stay up then, too, encouraging everyone to conserve even more. Lest anyone screams “socialism,” this convoluted regulatory construct tries to make up for the fact that electric utilities often print money like monopolies and—most significantly—carbon has no price to begin with, leading all of us to consume more electrons than would be the ideal market outcome. Until Washington manages to find a way to limit carbon and price carbon emissions, we will see many more regulatory constructs like this that make little sense other than for the fact that our climate policy (or lack thereof) makes no sense.

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