How the cost of government is hidden
Feeling unusually put-upon by state government, Connecticut’s two major electric utility companies, Eversource and United Illuminating, are pushing back, which is good, since, whatever their faults, they are too easily demagogued against, as nearly everybody hates electric companies, electricity being too expensive.
Connecticut has the second highest electricity costs in the country. But now the utilities, which formerly only grumbled privately about the biggest reason, are talking openly about it: government policy.
The forthcoming rate increases, expected to be around 19% for Eversource, are reported to be entirely the result of two state government mandates.
The first mandate requires the utilities to purchase the production of the Millstone nuclear power plant in Waterford, electricity that sometimes is cheaper than other sources and sometimes isn’t. State government has concluded that keeping Millstone operating is vital to Connecticut’s energy security.
The second mandate requires the utilities to keep providing electricity to customers who consider themselves too poor to pay for it. Whereupon that cost is transferred to customers who don’t consider themselves too poor to pay and whose rates go up.
Quite apart from those mandates, Eversource long has estimated that 15-20% of its charges to customers arise from state mandates having little or nothing to do with the cost of the production or delivery of electricity.
Then there is the failure of Connecticut to import more natural gas, largely the result of New York’s obstruction of new pipelines from the west.
The co-chairman of the General Assembly’s Energy and Technology Committee, Sen. Norm Needleman, D-essex, accuses Eversource of trying to make customers pay for a cash-flow problem the company suffered as a result of its recent “windpower investment gamble.” But even there state government has to share responsibility. After all, why would electric companies “gamble” on wind power if government wasn’t encouraging “green” energy and setting targets for accomplishing it?
The state government policies affecting electric rates are not necessarily wrong. But recovering their costs by hiding them in electricity bills, as Connecticut does, is dishonest. It deliberately misleads the public into thinking that the utilities are responsible for high rates when they are the work of government.
There is no social justice in requiring electricity users who pay their bills to pay as well for users who don’t pay. The cost of people who don’t pay their electric bills easily could be drawn against everyone from general taxation. Even the much bigger cost of subsidizing Millstone could be paid directly from general tax revenue.
Of course other taxes might have to be raised, but then people would see that it wasn’t the big, bad utilities that took their money but that their own state legislators and governor did. Then people would be prompted to make a judgment on the policies behind the extra costs.
But hiding the cost of government in the cost of living is practically a principle of government in Connecticut. State taxes and the cost of state government policies are concealed not just in electricity rates but also in wholesale fuel taxes and medical and insurance bills so that energy companies, hospitals, doctors, and insurers take the blame, just as electric companies do.
Indeed, hiding the cost of government in the cost of living is now a primary principle of the federal government as well, with trillions of dollars in government expense being covered not by taxes but by borrowing, debt, the resulting money creation, and thus by inflation, which most people imagine is a force of nature, like the weather, something beyond human control.
Inflationary finance prevents people from asking their members of Congress inconvenient questions, like: How much more war in Ukraine, other stupid imperial wars, illegal immigration, Social Security, Medicare, and new subsidy programs can we afford?
With their new candor about the origin of high electricity prices the utility companies are taking a big risk. Through the Public Utilities Control Authority, the governor and legislators can punish the companies expensively for telling the truth. But state government’s deception of the public is already expensive.