“We are accustomed to seeing news coverage of tearful hurricane victims praising the heroic utility workers who restore their electrical service. Not so heroic is the way the utility accountants are booking that expense in a way that gives huge future streams of profits to the poor storm-victim utility.”
Over the years, the procedures for state-level utility rate cases have evolved into a pretty standard set of formulas and estimating methods.
Most states use a future “test year” where the utility estimates its revenue and costs for an upcoming period. Naturally, the utility will low-ball the projected revenue to justify asking for a higher level of revenue through rates approved by the regulators. Costs in the model year will be overstated as much as the utility thinks they can get away with.…
Continue Reading“[William] Baumol was worried, however, by a very different sort of entrepreneur: the ‘unproductive’ ones, who exploit special relationships with the government to construct regulatory moats, secure public spending for their own benefit, or bend specific rules to their will, in the process stifling competition to create advantage for their firms. Economists call this rent-seeking behavior.”
– Robert Litan and Ian Hathaway. “Is America Encouraging the Wrong Kind of Entrepreneurship?” Harvard Business Review, June 13, 2017.
MasterResource covers business entrepreneurship, not only the in’s and out’s of energy history and energy policy.
Good entrepreneurship is about serving consumers in a private property, voluntary exchange, rule-of-law setting. Bad entrepreneurship is about a business receiving special government favor to advantage itself at the expense of consumers and (free market) competitors.…
Continue Reading“Will Ms. Lavelle admit that global lukewarming is a valid area of scientific inquiry and conclusion; there are benefits, not only costs, to the human influence on climate; and ‘government failure’ exists alongside ‘market failure’ in the quest to ‘do something’? Adaptation to realistic scenarios, private sector as well as public, is an alternative to–and opportunity cost of–mitigation.”
The article by Marianne Lavelle, “5 Shades of Climate Denial, All on Display in the Trump White House,” a feature at Instide Climate News (June 9, 2017), deserves a second look. The good news is that a much more useful categorization that has been offered (by Richard Mueller, below) can be used to correct the unstudied, biased five categories presented in ICN.
Here are Lavelle’s five categories: