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This is not about the excellent 80s band, unfortunately.

Companies that provide necessities of life serve as punching bags to the public, media, and politicians.  I’ve said this before.  This week, we have more examples of beating up electricity and other utility providers.

First, as I was explaining in my “Energy Efficiency 101” course Friday for new and recent hires at Michaels Energy, power companies are expected to provide power 24/7, every minute of the day, hell or high water, with no emissions, no nukes, out of sight, and with negligible cost.  It would be easier and less controversial to add Bill Clinton’s melon to Mount Rushmore than it would be to build a base-load coal or nuclear plant, but get this; in Wisconsin, Dominion Resources is being lambasted for shutting down the Kewaunee nuclear plant near Green Bay.

The fact is, we have abundant generating capacity in the Midwest and in Wisconsin in particular.  I always love it when people on the outside ascribe motives to a company’s business decisions, which are essentially based on making money.  Apparently, Dominion made a mistake in buying this plant, unless it paid fire sale prices.  Nevertheless, Dominion says it cannot turn a profit to operate this plant with the abundance of electricity in the state.  And who wants to buy a money loser?  Dominion is likely acting as my neighbor down the street.  Their house has been for sale for at least 2 years, but apparently they don’t need to move that badly and therefore, they wait for a buyer with deep pockets.  My guess is Dominion would rather shut down and hold the plant rather than sell at a deep discount and lose money.  Maybe they are guessing the cost of carbon will skyrocket.  Who knows?  But by all means, vilify them for trying to turn a profit.

For more ignorant commentary, just turn on the television or browse the internet for press coverage of hurricane Sandy devastation.  “We have an antiquated, fragile electrical and communication system from the 1950s.”  “Why didn’t the President invest the $800 billion in hardening the New York electrical grid?”  “Why isn’t the power grid buried so we don’t have these massive outages.”  In response to these, one by one:

Let me first say that interestingly the most sophisticated personal communication device in the world, the Apple iPhone (and all other cellular phones, not to pick on Apple) was rendered absolutely worthless, while the pay phone – you know the ones at the outskirts of parking lots that millenials have never used before, the ones from the 1950s, are the only ones that worked after Sandy passed through New Jersey and New York.  People actually waited in line to get a chance to use one of these things after the storm.

In response to the antiquation, I have an answer for every question that begins with “Is it possible…”.  The answer is always yes, but how much money, time, and resources do you want to throw atit?  I’m sure we could build a military grade, shock (as in bomb) proof, electromagnetic pulse proof, wind proof, flood proof, fire proof, rodent proof, shenanigan proof system, but at what cost?  On Long Island, thousands of lineman from all over the country converged to restore power as quickly as possible.  They are not doing it with extension cords.  They are rebuilding substations and distribution systems, and I suppose there is a band-aid here or there that they cobbled together with spare parts and will come back to fix later, but for the most part, I’m sure they are restoring the systems to long term functionality.  This alone costs a mint and takes “too long”.  Would Long Islanders prefer a buried system that costs billions while they sit in the dark till next September?  I doubt it.  Remember – reliable, free power.  In this case that means restoring to the old way of doing things as quickly as possible.

Regarding the stimulus not going to grid hardening: I’m not going to get into the thousands of stories of waste, fraud and abuse from that, but I would just say that $800 billion would do whatever Bill O’Reilly thinks it should do, from Times Square to Battery Park – what is that – a quarter of Manhattan – maybe?

And speaking of burying things, vital arteries of the NYC transportation system, both mass transit and road traffic, are underground, and from what I’ve seen, most of it was flooded with salt water.

In other news, I read an interesting piece from Holmen Jenkins in The Wall Street Journal this week: “Hug a Price Gouger.”  Apparently there are price gouging laws in effect in some, if not most or all states, so retailers don’t take advantage of market forces when selling essentials, like batteries, gasoline, or generators.  But what do we get whenever people pay below the supply/demand curve?  Shortages and hoarding.  Rather than paying a high price and considering “do I really need a shopping cart full of bottled water”, consumers pay the normal charge, and they simply “stock up” at precisely the time everyone else needs some.  Or would customers buy just five gallons of gasoline at $12 per gallon rather than standing in line for three hours to fill-er-up at $4.65.  Rather than being thrown in jail for charging what the market will bear, maybe we should just let merchants weigh the costs, benefits, and risks of lost future business and charge what they want, when they want.

Jeff Ihnen

Author Jeff Ihnen

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