I didn’t know whether to laugh or cry when I read about Pacific Power’s proposed 20-percent rate hike. Cry because that’s a heck of an increase for a lot of people already struggling with bills, and laugh because they will probably pull it off. Rebuilding a company’s infrastructure by buying new equipment, for example, is usually transparent to a customer in any competitive business. Upgrades are performed to meet increasing customer demands (and revenues) and to find ways to reduce costs (since volume usually means lower cost). More times than not the result is a reduction, not an increase, in customer prices.
According to Pacific Power, the 20 percent increase equals $470 million that Oregon customers will have to cover for investments (wind farm, coal cleaners, and transmission towers). I’m guessing that a large part of that is for the wind farm (which includes the transmission towers) and I’m guessing that this new source of electricity is being considered because of additional demand, or to cut electricity generation costs. (Wind is far cheaper than nuclear and probably cheaper than hydroelectric).
What if your local grocery store announced that it had to increase its prices by 20 percent because it was planning on opening up ten new stores around the country to meet new customer volume. I sure wouldn’t shop there anymore. But, you see, Pacific Power will do this because they can, and customers just have to deal with it. I’m not dissing Pacific Power’s performance; they do a really great job. But come on, 20 percent to buy new gear? I don’t think so. Solar panels are looking more inviting by the second!
This article appears in Mar 11-17, 2010.
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The PUC in Oregon is a lot like the PUC in the other states. As long as company accountants can ‘justify’ the proposed rate increases, they get approved. If inflation doesn’t justify the increase, then ‘infrastruture’ does. The PUC makes sure that the increases don’t come more often than once a year and that the power industry always has an advocate in the capitol.
Rate increases are like the seasons-one follows the other, follows the other.
OK, I’m not an educated man, and if I’m wrong here please feel free to educate me on this. It’s always been my understanding that a business usually grows by using company profits. Am I to believe that Pacific power is making 0 profits, so to pay for the upgrades they have to raise our rates. This just doesn’t make any sense to me. What really sucks is we’re at their mercy, because where else can we get power. It’s just another great example of corporate greed. They want to jack up the prices 20%, Then let’s cut our use by 20%. That shouldn’t be too hard. I’m turning my heaters to 60 degrees, and doing whatever else I can do to cut my electric bill by 20%. I’ll just put on a sweatshirt if I get cold. Now I’m going to facebook and Myspace to pass the word.