Lost my faith in the free market economy the other day!

[glockfan.45]

First off I have always considered myself a Libertarian on all issues with the exception of our borders. As such I have supported the concept of a unregulated free market economy.......untill now   . Perhaps some other members here have had this problem or heard of it. We have an electric company that holds a monopoly over this area and has for some time. Some years back the state legislature put a freeze on their rates for ten years, or untill competition moved into the market.

Long story short competition never came into the market and the rate freeze expired. Now I never really gave much thought to the issue untill Ameren IP (the electric company) announced that they would be increasing their rates in the following months. I still didnt give it much thought as I figured over 10 years they will just be going up to match inflation. Boy was I wrong! My electric bill used to average around $110.00-$120.00 per month, this months bill $397.00   . How in the hell can they justify that much of a hike? Its extortion plain and simple. They are the only power company and unless you want to live like the Amish you have little choice but to pay it. Am I wrong for thinking that if a company provides a vital service to a area, and has a monopoly on said service that the Government has the right to place restrictions on their prices to prevent abuse like this? If it were the cable company, or my ISP thats fine I dont have to have their service, but I have grown fond of things like heat, hot water, lights, and so on. As much as I hate to call on the .gov to act this is ridiculous and needs to be dealt with.

[Manedwolf]

Actually, in a way, utility monopolies are the fault OF the government.

Because the government controls and regulates the lines themselves, only the biggest dog on the block, the one with all the money, is able to get their ear and get through all the regulatory paperwork. There is no such thing as a "small time power producer", even though in many areas, the lines are most certainly capable of accepting electrical input from other producers.

It's government rules that have prevented people from putting up solar cells and selling excess power back onto the grid, for example. It's zoning laws that keep you from just putting photovoltaic cells all over your roof in a lot of areas. And getting through the legal work and paperwork to do something like sell power from wind turbines into the grid is more costly than any profit you'd see for years.

[wmenorr67]

Buy your own generator and only use what you have to when you have to.

[El Tejon]

Extortion to bill you for what you take?  No, that's the market at work.

No such thing as a free lunch, no such thing as a "rate freeze."

[auschip]

Sounds like it was the rate freeze that caused the issue to begin with.  A rate freeze will discourage competition from entering a market.  Meanwhile, the company currently providing power is struggling to continue to cover costs of business while their rates are not increasing with inflation.  Plus, the government has already shown they will freeze rates, so they need to prepare in case it happens again. 

I'm no economist, but it sounds like a classic case supporting free markets.

[glockfan.45]

Buy your own generator and only use what you have to when you have to.

Doubt very much the wife would go for that, actually it doesnt sound very good at all. Gas isnt cheap now either, listening to a noisy generator does not catch my fancy, and starting and stopping a generator all day to keep the food in my fridge from spoiling isnt an option while away or at work.

Extortion to bill you for what you take?  No, that's the market at work.

No such thing as a free lunch, no such thing as a "rate freeze."

As I said its a vital service. Anybody who does not agree I challenge you to go as long as you can with the electric at your home turned off and tell us how long you last. Charging a fair price, and taking advantage of people who are dependent on your service are two different things.

Sounds like it was the rate freeze that caused the issue to begin with.  A rate freeze will discourage competition from entering a market.

The freeze was to be lifted when competition came to town so I doubt that was it.

[mtnbkr]

It's government rules that have prevented people from putting up solar cells and selling excess power back onto the grid, for example.

I am pretty sure I've read accounts of people doing this.  You get credits from the electric company when you supply more power than you use. 

Because the government controls and regulates the lines themselves, only the biggest dog on the block, the one with all the money, is able to get their ear and get through all the regulatory paperwork.

There's also a large NIMBY issue to deal with.  Dominion Power is dealing with this right now.  They want a new line through a nearby region and everyone there is fighting tooth and nail.  Imagine if there were 3-4 regional power companies wanting to put their own lines up..

Chris

[Headless Thompson Gunner]

Hrrmph...

 

[JimMarch]

I live in a motorhome.  About $9k bought me a complete off-grid electrical system good for 20 years:

$3000 - solar panels (660watts, 4 big GE panels)

$1800 - primary inverter (2800w Outback VFX2812 with controller, also acts as battery charger if I feed it AC)

$500 - solar charge controller (Outback MX60, adapts the 48v panel array to 12v battery)

$1800 - HUP "Solar One" battery, 12v, smallest they make: 845amp/hrs, 650lbs.  Yeah.  Big sucka.  Basically a forklift battery except higher quality, made for deep cycle needs.

$500 - backup inverter (1,100w).

$1,000 - value of the used Onan 4kw genset that came with the rig.

The backup inverter let's me "split the system", running critical systems (mainly computer/router/signal booster ) off battery and solar power while running something like air conditioning or electric heater or electric hot water heater off of minimal AC input - either the genset running low enough to go 8 hours on a gallon of gas, or a lowly 15amp shore cord.  In the latter's case I turn OFF battery charging from the AC line and do solar-only battery charging (which is plenty).

I can get by just fine with zero shore cord and no genset time unless it's either very hot or very cold.

The average house would need at LEAST double that panel size to get a major drop in power costs but wouldn't need the battery subsystem (selling power back to the grid by day, using the grid as the battery by night).

Unfortunately panel prices are even wilder right now because electricity prices in Europe and Japan are much higher and they're buying up every panel they can lay hands on.  There are several new-tech panel plants coming online that should help the situation within a year or two.

The fact that newer tech panels (plus increased production in China and India of old-school types) is coming is one reason electricity prices are rising so fast.  Who wants to invest in new power plants when the price curve on solar panels WILL be dropping like a stone once Walmart has 'em from China.  Ponder what's happened to the prices of all OTHER electronics - and solar panels are basically a chipmaking process (silicon wafers).  If I can live almost entirely solar now on less than $10k, you can bet a whole house will be able to do so in well under 5 - 7 years.

If you were an energy company exec and knew that too...what would you do?

[El Tejon]

My gunsmith is a vital service but I pay the bill and do not expect others to pay my way.

TANSTAAFL

When prices rise, someone will provide an alternative, as jim March posted, that's the market at work.  However, just because prices rise, does not mean one gets to have others pay.

[roo_ster]

Self- & gov't-selected monopolies are a goddawful mess.  What you have is not a free market in power and more gov't may exacerbate the problem. 

For instance, too much go'vt interference could cause the service to be terminated, period.  Ask the knuckleheads in CA who regulated ATMs out of existence by regulating ATM fees.

You'd likely find competitors move in if both wholesale & retail, generator & infrastructure de-regulation came about.  De-regulation only one part of hte eqution is a recipie for California-type blackouts (mismatch between wholesale & retail de-regulation).

Even though your power co is a monopoly, be assured there is a ceiling price on what they can charge.  At some point, a Jim March "off the grid" solution becomes viable.  AKA, "substitution."  I yearn for man-portable fusion generators and/or natural gas fuel cells to be sold at Wal-mart.

[RJMcElwain]

Glock,

It sounds like your government decided to do away with the capitalist system and try Communism or Socialism as a means of delivering electricity to you. It failed, and now you're paying the catchup price. My guess is that, during those ten years, Ameren cut back on maintenance and upgrades. Now they're having to pay catchup as well, and you get the bill.

Bob

[cordex]

Just a quick check - did your usage increase at all?  What are you paying per kwh now?  What were you paying before?

I still didnt give it much thought as I figured over 10 years they will just be going up to match inflation. Boy was I wrong! My electric bill used to average around $110.00-$120.00 per month, this months bill $397.00

Let's say you're a power company.  You've been locked into a rate plan for ten years.  Someone who once paid $120 per month is still paying $120 per month now ten years later.  Considering an inflation rate of 3% for the past ten years how much money have you lost to inflation per customer?

*mumble mumble* ... carry the one ... *scratches head*
Turns out to be about $2,107.99 per customer for that period of ten years assuming an average of $120 per month consumption with an ending cost per month of $156.57 (based totally on inflation).  Consider that a tiny power cooperative in my area has 20,000 customers and you're talking $42 million dollars lost to inflation alone.  Add to that increased wages, increased cost of fuel, increased cost of materials, etc., etc. and - even if we're just looking at a tiny power company - pretty soon we're talking real money.

If I had to guess, they're going to want to recoup that lost income as quickly as possible.  They may have had to take out loans just to keep in operation, and they'll have to pay those back plus interest.

I'd say that this is a direct result of your politicians trying to buy votes.

[Gewehr98]

Let me get this straight...

You were sucking at the end of the power line with a kilowatt-hour usage to the tune of $397, but enjoyed the rate freeze at $110-$120/month previously.

Well, duh, I'd love to suck that much juice and still pay only 1/3 out of pocket, libertarian or not.


In the meantime, I've gone over to solar panels, inverters, and battery banks myself.  I buy the big AGM wheelchair batteries at a local surplus liquidator for $10.00 each and run ProSine inverters.  They don't run the whole house, but do a good job keeping my garage workshop lit, as well as the house ethernet and several of the computers.  As I add more loads to the experimental system and keep converting incandescent to fluorescent, I expect to drop my monthly bill to around $90/month.   

[BakerMikeRomeo]

unregulated free market economy

state legislature put a freeze on their rates

*warble*
One of these things is not like the other
One of these things just doesn't be-long
One of these things is not like the other
One of these things just isn't the saaaaaame...

~GnSx

[Perd Hapley]

I'd call the rate increase another "small triumph over Marxism."  Now, the bigger triumph would involve a true free market that would let rates rise or fall to their proper level.

[El Tejon]

fistful, but, but that would cost votes when people would have to pay their own way.

[Perd Hapley]

glockfan lives across the river from me, so I think he's seen the same lengthy (as in week-long) power outages we've had after some recent storms.  If not, my analysis may be off-kilter, especially as we are served by a different branch of Ameren.

Although the outages were partly caused by some unusually severe winds and ice storms, failure to cut back limbs and maintain the grid was the other part of the problem.  Although Ameren is being pressured to improve this, and though our rates are apparently lower than average, many are hostile to the idea of raising rates to pay for it.  In fact, a rate DECREASE is being demanded.  A DECREASE.  This seems downright backward to me, especially because Ameren went without the money they would have made from hundreds of thousands of customers for those two and a half-weeks (when the three major outages are combined).  Not to mention that they had to pay crews from around the country to work around the clock.  How can we expect the grid to be maintained when we won't pay for it? 

I'm afraid we may recapitulate the energy problems in California. 

[thebaldguy]

We had an issue with our gas company. Reliant energy, by law, must get five bids for natural gas for it's customers. A few years ago, word leaked out that they could have purchased natural gas cheaper than the rate they were paying. Their explanation: we took the lowest of the five bids; they are not required to seek out and find the cheapest natual gas.

Our local governments never got around to passing a law requiring them to find the cheapest natural gas. Still haven't.

We have some electrical co-ops who charge much less than regular utilities. The catch is you have to live in their service area. My electrical company of course will not match their rates. I don't think many utilites have a "Low price guarantee".

Glockfan: I forgot to mention this, but have you thought about a windmill electrical generator? Our city forbids any structure taller than your house on residental property (except antennas), but this might work for you. Note that the electrical company will make this a difficult task (I've read a few nightmare stories), but I think they have to purchase the extra power you don't use. 

[CAnnoneer]

$400? How many kwh are you drawing a month?

[Firethorn]

Sounds like it was the rate freeze that caused the issue to begin with.  A rate freeze will discourage competition from entering a market.

I have to agree with this.  Any potential competing company would have to look at the rates the company is charging under the cap and go 'I can't make money at that level!'

I'm curious, what's your rate and kw/h usage, if you don't mind?  Also, did you check to make sure you didn't come out of some sort of averaging scheme?

Meanwhile, the company currently providing power is struggling to continue to cover costs of business while their rates are not increasing with inflation.  Plus, the government has already shown they will freeze rates, so they need to prepare in case it happens again.

Yep.  Though I'll note that like water and sewage, the cost and logistics of creating a parallel network is such that it's likely not to happen.  In these cases I like the idea of a coop.  That way the customers are also the owners, limiting this kind of stuff.

We had an issue with our gas company. Reliant energy, by law, must get five bids for natural gas for it's customers. A few years ago, word leaked out that they could have purchased natural gas cheaper than the rate they were paying. Their explanation: we took the lowest of the five bids; they are not required to seek out and find the cheapest natual gas.

I've worked in government purchasing a bit(computers).  The one problem I've seen with going with the lowest possible price is that you don't always get the product you need.  IE the lowest possible source of the NG might not have been able to deliver a reliable supply.

Could also be palm greasing and such, but I had to point it out.

[glockfan.45]

My gunsmith is a vital service but I pay the bill and do not expect others to pay my way.

First off I dont see a gunsmith as being a vital (as in modern life is not possible without it) service  . Second if your regular gunsmith wants to charge an insane, unreasonable amount of money for his service you have the option of going to his competition who will likely have a much more fair price. Here we dont have that choice. Our choice is to pay Ameren through the nose, or sit in the dark.

Even though your power co is a monopoly, be assured there is a ceiling price on what they can charge.  At some point, a Jim March "off the grid" solution becomes viable.  AKA, "substitution."  I yearn for man-portable fusion generators and/or natural gas fuel cells to be sold at Wal-mart.

I'm not sure that there is a "ceiling price", and at this point in time buying $10k or more worth of equipment isnt a worthy prospect. We are still far off from practical, affordable off grid energy.

glockfan lives across the river from me, so I think he's seen the same lengthy (as in week-long) power outages we've had after some recent storms.  If not, my analysis may be off-kilter, especially as we are served by a different branch of Ameren.

Although the outages were partly caused by some unusually severe winds and ice storms, failure to cut back limbs and maintain the grid was the other part of the problem.  Although Ameren is being pressured to improve this, and though our rates are apparently lower than average, many are hostile to the idea of raising rates to pay for it. 

I spent a total of about 3 weeks with no power in the last year due to storms. The problem was not a lack of funds to maintain lines, the problem was people that raised hell about their trees needing to be trimmed for clearance. Ameren even claimed that to be the reason for the massive outages.

Glockfan: I forgot to mention this, but have you thought about a windmill electrical generator? Our city forbids any structure taller than your house on residental property (except antennas), but this might work for you. Note that the electrical company will make this a difficult task (I've read a few nightmare stories), but I think they have to purchase the extra power you don't use. 

For the time being I rent so installing any structure of the sort is out of the question.

$400? How many kwh are you drawing a month?

Last month 3067kwh

I have to agree with this.  Any potential competing company would have to look at the rates the company is charging under the cap and go 'I can't make money at that level!'

As I said before the rate freeze was designed to be lifted when competition came into the market. Sadly a company from Chicago (cant remember the name) looked into the area and Ameren fought to keep them out.

[Perd Hapley]

I spent a total of about 3 weeks with no power in the last year due to storms. The problem was not a lack of funds to maintain lines, the problem was people that raised hell about their trees needing to be trimmed for clearance. Ameren even claimed that to be the reason for the massive outages.

What do you mean about people raising hell?

I spent at least two weeks powerless myself.  Worse, I had to babysit a bunch of old folks who had no power.  I work at an apartment building.  In the summer outage, they were out for eight days.    

[glockfan.45]

People would make threats of legal action against Ameren if their trees were trimmed for line clearance. I guess a few branches on their trees were more important than maintaining reliable power  . I spent over 2 weeks without power durring the summer black out so yes I can feel your pain.

To all those who defended Amerens actions by claiming they had been losing money over the last 10 years they posted profits of $376 million last year. This was just for the IP market.

[Perd Hapley]

People would make threats of legal action against Ameren if their trees were trimmed for line clearance. I guess a few branches on their trees were more important than maintaining reliable power  .

But on the other hand, lots of people expect Ameren to trim trees on their private property.  Either way, I agree that the customers should take a lot of the blame.  Mostly, the problem is the monopoly situation.