Take over the electric company

24Sep06

Today in the San Francisco Chronicle, there was a good article about how efforts to increase the use of renewable energy for electricity generation were being stifled by excessive regulation and red tape. I had two responses to the article.

First, while it is admirable that the state is setting goals for increasing the use of renewable energy and ordering various parts of the state bureacracy to pursue those goals, it is arguable that what we really need is just a good, stiff tax on carbon emissions, followed by using the income generated to pay for equivalent tax breaks for renewable energy investment. Between the carrot and the stick I think we could reach our goals, and reach them with a lot of the efficiency for which private enterprise is justly famous. We could dispense with a lot of bureacratic, regulatory activity, which is always a plus. Also, and maybe even more important, a blanket tax on carbon emissions would include automobile emissions, which would go a long way towards reducing global warming.

But if the carbon tax seems problematic, then there is my second idea. That idea is for the state to take over the electric companies and operate them as state enterprises. According to the article I read, a lot of the cumbersome bureacracy is driven by a justifiable paranoia that, if not watched carefully, the American energy industry would once again loot (and I’m using the nicest term, here) the state. If we take over energy generation, that won’t be a concern. We could dispense with the entire deadweight loss of the Public Utilities Commission along with the deadweight loss of the money that the utilites spend to dupe, bribe and/or strongarm the Public Utilities Commission, and also with the money that gets paid out to the shareholders of the utilities as their government-guaranteed profits. There would be no need for new bureacracy since I am certain that the electric utilities already have sufficient administrative staff (bureacracy) between them to handle the task.
Plus, we could save all that money that Pacific Gas & Electric (Northern California’s dominant energy utility) pays for massive TV ad campaigns to persuade us all of their benevolence. The current advertising splurge features a small child disrupting his classroom with cries of enthusiasm for renewable energy. Of course, the article in the Chronicle confirmed my own suspicions that, for the last two years, PG&E has actually been reducing the percentage of energy it uses from renewable sources. I don’t want to make too much of that, because I can see the possibility that the trend of the last two years might just be an accident of circumstances. But in either case we could save the expense of PG&E spending income from the ratepayers to tell us how great PG&E is. That would have benefits for the public discourse in addition to the economic savings.

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