Will the Last Person Leaving Seattle -- Turn Out the Lights

On the heels of the idiotic food composting fine, now we have this from The Seattle Times:

Sawant wants Seattle City Light to flatten rates, help residents
Seattle residents pay a higher average electricity rate than businesses, and that’s not fair, says City Councilmember Kshama Sawant. So she will ask a council committee Wednesday to consider a radical change in how City Light charges for power.

Businesses should pay more or there should at least be only one rate class, Sawant says.

Mayor Ed Murray declined to comment, while City Light said there are good reasons for setting the rates the way they are now.

City Councilmember Sally Clark expressed concern over Sawant’s proposal.

Under City Light’s current rate structure, customers are grouped into classes, with all residential customers in one class and businesses separated into different classes according to their size and location.

Each class is charged based on what City Light needs in order to recover the cost of providing electricity to them, and the average residential rate is the highest. The 2014 average residential rate is 9.04 cents per kilowatt hour, while the rate for very large businesses outside downtown is 5.89 cents. The proposed 2015 residential rate is 9.35 cents, an increase the council’s energy committee is expected to approve Wednesday.

What Ms. Sawant fails to grasp is the economics of scale. If my business needs a 4,000 AMP service at 4,400 Volts, this is going to be a lot cheaper for Seattle City Light to deliver and maintain than if it has to serve the equivalent load of 400 homes. That is a lot more miles of cable, pole transformers, meters, etc... Of course, the cost per household is going to be more expensive.

The unintended consequence to which she is blind will be the departure of large businesses (jobs) from Washington State. The last time this happened was when Boeing suffered under the recession of 1971 (title of this post) and went from 100,800 employees in 1967 down to 38,690 in April of 1971. President Nixon was able to pull us out of that recession at great cost in August of 1971 by rendering the Bretton Woods system inoperable and getting the US Currency off the Gold standard and making it a fiat currency. Very favorable in the short term but toxic as hell in the long term. Now that the Dollar is no longer linked to its equivalent of Gold bullion, the Dollar is free to inflate.

If Seattle implements this rate change, it will lose several tens of thousands of jobs over the next ten years. The cost of groceries is going to rise (lighting and refrigeration). The cost of employment is going to rise (fewer jobs and lower starting salary). 

Does Ms. Sawant take all this into account? Thought not.

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About this Entry

This page contains a single entry by DaveH published on September 24, 2014 6:47 PM.

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