“The formula gives the utility little incentive to reduce operating costs as these are passed through allowing full recovery. As long as the rate of return (rr) is above the cost of debt, the rate base can be inflated by spending more capital than necessary. The rr is almost always well above the cost of debt.”
Regulated utilities, each granted a territorial monopoly by the state, are allowed to recover their cost of doing business and earn a return on invested capital. The so-called revenue requirement is expressed in this formula:
… Continue ReadingRev = Oc + (V-D)rr
Where:
Rev = Revenue justified by cost and return
Oc = Operating cost including depreciation
V = Value, always first costs
D = Depreciation
rr = Rate of return allowed by regulators
(V-D) = Rate base, this is the current book value of assets and the un-recovered part of depreciable assets and other amortized capital.
“Voters and citizens all must tell Tom Steyer, the moneyed Left Foundations, taxpayer-inebriated scientists, green-energy cronies, Left politicians, and Crony Republicans that human-need philanthropy should replace the politics of pessimism and waste. It is time to end the futile climate crusade.”
– Robert Bradley, “Doubling Down on Climate Alarmism,” Forbes.com, December 1, 2014.
The free-market energy space these days is very crowded, quite unlike the old days when just a few of us were battling Big Government, Big Environmentalism, and Big Cronyism (think Enron). As one of the veterans, my blogs and op-eds now compete against a number of new voices, beginning with Alex Epstein and continuing with “America’s Voice for Energy” Marita Noon, and others. (Marlo Lewis, then as now, stands above as scholar-blogger.)…
Continue ReadingLife must be melancholy at best the neo-Malthusian closed-minded pessimists at such anti-liberty/pro-state organizations as Sierra Club, NRDC, 350.org, and Center for American Progress. No Julian Simon or Bjorn Lomborg or Judith Curry or Alex Epstein or Matt Ridley allowed at these shops!
Thankfully, most people–and certainly voters through demonstrated preference–are pessimistic about government and optimistic about life in a free society. And so it must be hard for the chronically discontent to interact on a personal, family level, particularly during the holiday season.
Consider the following quotations of Messing With The Holidays.
Heed the Warnings: Why We’re on the Brink of Mass Extinction (The Daily Beast, November 30, 2014)
… Continue Reading“Evolutionary biologist Sean B. Carroll, executive producer of the doc Mass Extinction: Life At the Brink, on why mankind’s days are numbered….”