“Affordable” Utility Service: What Exactly Is Regulation’s Role? Utilizing the nation’s economy stressed, politicians are pressuring regulators to produce utility service “affordable.” This picture has three problems. Wealth Redistribution is Not Regulation’s Department The regulator identifies prudent costs, computes a revenue requirement to cover those costs, then designs rates to produce the revenue requirement under embedded cost ratemaking. Rate design makes each customer category bear the expenses it causes. None among these steps—prudent cost identification, revenue requirement computation, cost allocation—involves affordability. Affordability becomes one factor only we lower rates for the unfortunate by raising rates for others if we jigger the numbers—if. Achieving affordability through rate design means compromising cost causation to redistribute wealth. It resembles taxation of just one class to profit another, using this exception: With taxation, citizens can retire representatives whose votes offend; however with utility service, captive customers are stuck using the rates regulators set. Rather than shifting costs between customer classes, regulators might redistribute wealth in different ways: by “taxing” shareholders, for example., reducing shareholder returns underneath the otherwise level that is appropriate. But taxing shareholders isn’t any more the regulator’s domain than is taxing other customers. And it is likely unconstitutional: Having invested to serve the general public, shareholders expect “just compensation,” undiminished by a forced contribution for affordability. Moving money among citizens is vital to a fair society. Poverty is intolerable and private charity never suffices, so government steps in. But helping the luckless ought to be done by political leaders, who must justify their actions to your electorate; not by professional regulators, whose focus should be industry performance. Affordability of any product—groceries, a Lexus, or utility service—depends on one’s wealth and income, as well as on the cost of other products. The poor could better afford utility service whenever we raised their income and increased their wealth. Or if we lowered their price of housing, health care, transportation, or education. But these initiatives are outside regulators’ authority. To produce regulators in charge of affordability is illogical. Cheap Energy is Cheap Politics Politicians who argue for affordability make the road that is easy. All efforts that increase costs, while commanding the regulator to make service “affordable,” is low-risk politics, responsibility-avoidance politics, cheap politics to legislate economic development, greenness, reliability, energy independence, and technology leadership. When politicians call for “lower rates,” the electorate feels entitled to get in the place of encouraged to contribute. But no family, no congregation, no civil society, thrives if its key verb is “take” in place of “give.” And when lower rates now result in higher costs later, citizens become cynical. Self-doubting, also, while they question their capability to differentiate pander from policy. They are the results when politicians avoid their responsibility for affordability. “Affordability” Undermines Regulation’s Responsibility Mathematician Carson Chow says he is found the cause of our obesity epidemic: low food prices. Studying 40 years of data, he spotted both correlation and causation between girth growth and cost declines. He traced these trends to government farm policy shifts (from investing in non-production to stimulating full production) and technology boosts (which lowered production costs). The reduced the fee, the greater amount of production; the greater amount of production, the greater (fast) food; the more food, the more calories available; the more calories available, the greater amount of calories consumed. See C. Dreifus, “A Mathematical Challenge to Obesity,” The New York Times (May 14, 2012). Our company is both over-consuming and under-appreciating: Dr. Chow found that “Americans are wasting food at a progressively increasing rate.” (Fairness point: Chow has his doubters. See Michael Moyer, “The Mathematician’s Obesity Fallacy,” Scientific American (May 15, 2012). So what does food have to do with “affordable” utility service? A regulator’s job is to regulate—to performance that is establish, then align compensation with compliance. In this equation, affordability is not a variable. To make service affordable to the unlucky, the commission would have to lower the price below cost. That leads to overconsumption, to Dr. Chow’s “waste.” This inefficiency hurts everyone. Economic efficiency exists when no further action can create benefits without increasing costs by more than the benefits. Conversely, economic inefficiency exists when we forego some action that, if taken, can make someone better off without making anyone worse off. To over-consume, to waste, to act inefficiently, to leave an advantage up for grabs, makes everyone worse off. Underpricing in the true name of affordability makes someone worse off, unnecessarily. How sensible is that? Actions for Affordability: The Proper Roles for Regulators Unless essential services are affordable, government shall never be credible. Regulators, being element of government, need certainly to help. (A commission staff chief told me 25 years back, “Sometimes you must put away your principles and do what’s right.”) Plus some statutes that are regulatory require the regulator to help make service “affordable.” (As is the scenario, i will be told, in Vanuatu, an nation that is 83-island the South Pacific.) Listed below are 3 ways, in keeping with economic efficiency, for regulators to address affordability. Assist the unlucky reduce usage. Regulators can advocate for affordability by pressing for policies which make consumption less costly, like improved housing stock, “orbs” that signal high prices, and efficient lighting and appliances. Analogy: Doctors save lives not just by treating gunshot wounds, but by advocating for gun safety. (American Academy of Pediatrics: “The absence of guns from children’s homes and communities is one of reliable and effective measure to prevent firearm-related injuries. “) Interpret “affordability” as long-term affordability. Getting prices right and preventing overconsumption, whether or not it increases prices in the short run, reduces total costs in the long term. Expose the side that is dark of. Rather than follow politicians along the low-price, low-risk, cheap politics path, regulators, like Dr. Chow, can talk facts: concerning the real costs of utility service, the issue of overconsumption, the error of under-pricing. Making use of their credibility rooted in expertise, regulators can pressure legislators to do something on affordability directly by enacting policies that are income-raising. Better education, housing, and health care—all these result in higher incomes, so that citizens can afford utility service priced properly.

“Affordable” Utility Service: What Exactly Is Regulation’s Role?</ttile> </p> <p>Utilizing the nation’s economy stressed, politicians are pressuring regulators to produce utility service “affordable.” This picture has three problems.</p> <h2>Wealth Redistribution is Not Regulation’s Department</h2> <p>The regulator identifies prudent costs, computes a revenue requirement to cover those costs, then designs rates to produce the revenue requirement under embedded cost ratemaking. Rate design makes each customer category bear the expenses it causes. None among these steps—prudent cost identification, revenue requirement computation, cost allocation—involves affordability. Affordability becomes one factor only we lower rates for the unfortunate by raising rates for others if we jigger the numbers—if. Achieving affordability through rate design means compromising cost causation to redistribute wealth. It resembles taxation of just one class to profit another, using this exception: With taxation, citizens can retire representatives whose votes offend; however with utility service, captive customers are stuck using the rates regulators set.</p> <p>Rather than shifting costs between customer classes, regulators might redistribute wealth in different ways: by “taxing” shareholders, for example., reducing shareholder returns underneath the otherwise level that is appropriate. But taxing shareholders isn’t any more the regulator’s domain than is taxing other customers. And it is likely unconstitutional: Having invested to serve the general public, shareholders expect “just compensation,” undiminished by a forced contribution for affordability.</p> <p>Moving money among citizens is vital to a fair society. Poverty <a href="https://essay-911.com/">essay 911 com is intolerable and private charity never suffices, so government steps in. But helping the luckless ought to be done by political leaders, who must justify their actions to your electorate; not by professional regulators, whose focus should be industry performance.<span id="more-17101"></span></p> <p>Affordability of any product—groceries, a Lexus, or utility service—depends on one’s wealth and income, as well as on the cost of other products. The poor could better afford utility service whenever we raised their income and increased their wealth. Or if we lowered their price of housing, health care, transportation, or education. But these initiatives are outside regulators’ authority. To produce regulators in charge of affordability is illogical.</p> <h2>Cheap Energy is Cheap Politics</h2> <p>Politicians who argue for affordability make the road that is easy. All efforts that <em>increase</em> costs, while commanding the regulator to make service “affordable,” is low-risk politics, responsibility-avoidance politics, cheap politics to legislate economic development, greenness, reliability, energy independence, and technology leadership.</p> <p>When politicians call for “lower rates,” the electorate feels entitled to get in the place of encouraged to contribute. But no family, no congregation, no civil society, thrives if its key verb is “take” in place of “give.” And when lower rates now result in higher costs later, citizens become cynical. Self-doubting, also, while they question their capability to differentiate pander from policy. They are the results when politicians avoid their responsibility for affordability.</p> <p><strong>“Affordability” Undermines Regulation’s Responsibility</strong></p> <p>Mathematician Carson Chow says he is found the cause of our obesity epidemic: low food prices. Studying 40 years of data, he spotted both correlation and causation between girth growth and cost declines. He traced these trends to government farm policy shifts (from investing in non-production to stimulating full production) and technology boosts (which lowered production costs). The reduced the fee, the greater amount of production; the greater amount of production, the greater (fast) food; the more food, the more calories available; the more calories available, the greater amount of calories consumed. See C. Dreifus, “A Mathematical Challenge to Obesity,” <em>The New York Times</em> (May 14, 2012). Our company is both over-consuming and under-appreciating: Dr. Chow found that “Americans are wasting food at a progressively increasing rate.” (Fairness point: Chow has his doubters. See Michael Moyer, “The Mathematician’s Obesity Fallacy,” <em>Scientific American</em> (May 15, 2012).</p> <p>So what does food have to do with “affordable” utility service? A regulator’s job is to regulate—to performance that is establish, then align compensation with compliance. In this equation, affordability is not a variable. To make service affordable to the unlucky, the commission would have to lower the price below cost. That leads to overconsumption, to Dr. Chow’s “waste.” This inefficiency hurts everyone.</p> <p>Economic efficiency exists when no further action can create benefits without increasing costs by more than the benefits. Conversely, economic inefficiency exists when we forego some action that, if taken, can make someone better off without making anyone worse off. To over-consume, to waste, to act inefficiently, to leave an advantage up for grabs, makes everyone worse off. Underpricing in the true name of affordability makes someone worse off, unnecessarily. How sensible is that?</p> <p><strong>Actions for Affordability: The Proper Roles for Regulators</strong></p> <p>Unless essential services are affordable, government shall never be credible. Regulators, being element of government, need certainly to help. (A commission staff chief told me 25 years back, “Sometimes you must put away your principles and do what’s right.”) Plus some statutes that are regulatory require the regulator to help make service “affordable.” (As is the scenario, i will be told, in Vanuatu, an nation that is 83-island the South Pacific.) Listed below are 3 ways, in keeping with economic efficiency, for regulators to address affordability.</p> <p><em><strong>Assist the unlucky reduce usage.</strong></em> Regulators can advocate for affordability by pressing for policies which make consumption less costly, like improved housing stock, “orbs” that signal high prices, and efficient lighting and appliances. Analogy: Doctors save lives not just by treating gunshot wounds, but by advocating for gun safety. (American Academy of Pediatrics: “The absence of guns from children’s homes and communities is one of reliable and effective measure to prevent firearm-related injuries. “)</p> <p><em><strong>Interpret “affordability” as long-term affordability.</strong></em> Getting prices right and preventing overconsumption, whether or not it increases prices in the short run, reduces total costs in the long term.</p> <p><em><strong>Expose the side that is dark of.</strong></em> Rather than follow politicians along the low-price, low-risk, cheap politics path, regulators, like Dr. Chow, can talk facts: concerning the real costs of utility service, the issue of overconsumption, the error of under-pricing. Making use of their credibility rooted in expertise, regulators can pressure legislators to do something on affordability directly by enacting policies that are income-raising. Better education, housing, and health care—all these result in higher incomes, so that citizens can afford utility service priced properly.</p> </div> </div> <div class="post-meta"> </div> </div> <div id="comments"> <!-- If comments are open, but there are no comments. --> <div id="respond" class="comment-respond"> <h3 id="reply-title" class="comment-reply-title">Lascia un commento <small><a rel="nofollow" id="cancel-comment-reply-link" href="/affordable-utility-service-what-exactly-is-4/#respond" style="display:none;">Annulla risposta</a></small></h3> <form action="http://www.alfonsoriva.org/wp-comments-post.php" method="post" id="commentform" class="comment-form"> <p class="comment-notes"><span id="email-notes">Il tuo indirizzo email non sarà pubblicato.</span> I campi obbligatori sono contrassegnati <span class="required">*</span></p><p class="comment-form-comment"><label for="comment">Commento</label> <textarea id="comment" name="comment" cols="45" rows="8" maxlength="65525" aria-required="true" required="required"></textarea></p><p class="comment-form-author"><label for="author">Nome <span class="required">*</span></label><input type="text" name="author" data-hwm="" value="" class="f_author_hm"> <style type="text/css">.f_author_hm{display:none;}</style> <input id="author" name='authar' type="text" value="" size="30" maxlength="245" aria-required='true' required='required' /></p> <p class="comment-form-email"><label for="email">Email <span class="required">*</span></label> <input id="email" name="email" type="text" value="" size="30" maxlength="100" aria-describedby="email-notes" aria-required='true' required='required' /></p> <p class="comment-form-url"><label for="url">Sito web</label> <input id="url" name="url" type="text" value="" size="30" maxlength="200" /></p> <p class="form-submit"><input name="submit" type="submit" id="submit" class="submit" value="Commento all'articolo" /> <input type='hidden' name='comment_post_ID' value='17101' id='comment_post_ID' /> <input type='hidden' name='comment_parent' id='comment_parent' value='0' /> </p><p style="display: none;"><input type="hidden" id="akismet_comment_nonce" name="akismet_comment_nonce" value="cf4395db80" /></p><p style="display: none;"><input type="hidden" id="ak_js" name="ak_js" value="196"/></p> </form> </div><!-- #respond --> </div> </div><!-- #core-content --> </div><!-- #site-wrapper --> <div id="footer"> <div id="supplementary" class="one"> <div id="first" class="widget-area" role="complementary"> <aside id="nav_menu-3" class="widget widget_nav_menu"><div class="menu-menu-1-container"><ul id="menu-menu-2" class="menu"><li class="menu-item menu-item-type-taxonomy menu-item-object-category menu-item-1972"><a href="http://www.alfonsoriva.org/category/foto/">FOTO</a></li> <li class="menu-item menu-item-type-taxonomy menu-item-object-category menu-item-1975"><a href="http://www.alfonsoriva.org/category/audio/">Audio</a></li> <li class="menu-item menu-item-type-taxonomy menu-item-object-category menu-item-1973"><a href="http://www.alfonsoriva.org/category/video/">Video</a></li> <li class="menu-item menu-item-type-taxonomy menu-item-object-category menu-item-1974"><a href="http://www.alfonsoriva.org/category/testi/">Testi</a></li> <li class="menu-item menu-item-type-taxonomy menu-item-object-category menu-item-1976"><a href="http://www.alfonsoriva.org/category/eventi/">Eventi</a></li> <li class="menu-item menu-item-type-post_type menu-item-object-page menu-item-1968"><a href="http://www.alfonsoriva.org/guestbook/">Guestbook</a></li> <li class="menu-item menu-item-type-post_type menu-item-object-page menu-item-1969"><a href="http://www.alfonsoriva.org/info/">Info</a></li> </ul></div></aside> </div> </div> <!-- Search Field --> <div class="footer-content"> <form method="get" id="searchform" action="http://www.alfonsoriva.org/"> <div id="search"> <input type="text" value="" name="s" id="s" /> <input type="submit" id="searchsubmit" value="Search" /> </div> </form> </div> </div><!-- #footer --> <script type="text/javascript"> esp_tt_data_encoded = "W10="; 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