>Regulation of electrical utilities is quite possibly the single most tedious, technical, boring area of American public policy.
>And yet, the price that households pay for electricity is a salient issue, especially when it’s rising, and electricity prices for commercial and industrial uses are substantively quite important for the economy’s long-term prospects. So with electricity bills spiking recently, everyone’s got a take on the issue.
>And I’m concerned that many of these takes are much too narrow in focus and sort of mis-state the problem — which is that we need to treat electricity generation as a platform for broader growth and not just an item in the household consumption budget.
>First, let’s zoom out. Utilities in the United States come in three basic formats. One is publicly owned utilities (the Tennessee Valley Authority is by far the most important, but there are lots of smaller ones). The other two are investor-owned: vertically integrated utilities (now mostly in the Southeast, but used to be more common) in which the same regulated monopoly that runs distribution also owns power plants; and restructured utilities (nowadays most of the large markets like California, Texas, and the whole Northeast) in which a regulated monopoly runs distribution but there is a competitive deregulated market for generating electricity.
>The actual price-setting is somewhat discretionary and rule-based, but the basic idea is that the investors are entitled to cover their operating costs and earn some rate of return on their capital investments.
>And this is what most of the (too narrow, in my opinion) discussion is about right now: how to push that rate of return down.
>(…)
>People worry, reasonably, that data centers could push up their electricity costs. But anything that uses electricity — a factory, an electric car, a heat pump — poses that exact same risk. Places don’t normally achieve economic growth by preventing people from doing economically useful things with electricity and thereby making electricity cheap. You want a virtuous cycle where investments in generation and transmission fuel economic growth and the growth recoups the costs of the investments.
yggy touches on something that i feel has been underdiscussed in the data center wars: which is that the way grid expansion is funded in the US is insane and proposals surrounding “solving” the data center problem might be best started at trying to solve the way consumer electricity prices are set
omnipotentsandwich on
We need to start building more power plants and I think we really need to focus on building them in the Rust Belt and Coal Belt. These places have the right workers and right infrastructure. I posted an article in the DT yesterday about a company building a kind of hydroelectric battery out of a coal mine in my region. That’s something we need to do on a massive scale and will cost $50 billion or more. You can also turn them into solar farms. Coal plants can become nuclear power plants but that’s also an expensive process. I’m sure abandoned steel plants can be turned into power stations as well, but I’m not overly familiar with them.
Energy is key to a strong economy and renewables are far cheaper than gas and coal. Democrats need to seize on this issue to drive down costs for consumers while powering tech-based economic growth in liberal states while revitalizing rural and Rust Belt economies.
2 Comments
>Regulation of electrical utilities is quite possibly the single most tedious, technical, boring area of American public policy.
>And yet, the price that households pay for electricity is a salient issue, especially when it’s rising, and electricity prices for commercial and industrial uses are substantively quite important for the economy’s long-term prospects. So with electricity bills spiking recently, everyone’s got a take on the issue.
>And I’m concerned that many of these takes are much too narrow in focus and sort of mis-state the problem — which is that we need to treat electricity generation as a platform for broader growth and not just an item in the household consumption budget.
>First, let’s zoom out. Utilities in the United States come in three basic formats. One is publicly owned utilities (the Tennessee Valley Authority is by far the most important, but there are lots of smaller ones). The other two are investor-owned: vertically integrated utilities (now mostly in the Southeast, but used to be more common) in which the same regulated monopoly that runs distribution also owns power plants; and restructured utilities (nowadays most of the large markets like California, Texas, and the whole Northeast) in which a regulated monopoly runs distribution but there is a competitive deregulated market for generating electricity.
>The actual price-setting is somewhat discretionary and rule-based, but the basic idea is that the investors are entitled to cover their operating costs and earn some rate of return on their capital investments.
>And this is what most of the (too narrow, in my opinion) discussion is about right now: how to push that rate of return down.
>(…)
>People worry, reasonably, that data centers could push up their electricity costs. But anything that uses electricity — a factory, an electric car, a heat pump — poses that exact same risk. Places don’t normally achieve economic growth by preventing people from doing economically useful things with electricity and thereby making electricity cheap. You want a virtuous cycle where investments in generation and transmission fuel economic growth and the growth recoups the costs of the investments.
yggy touches on something that i feel has been underdiscussed in the data center wars: which is that the way grid expansion is funded in the US is insane and proposals surrounding “solving” the data center problem might be best started at trying to solve the way consumer electricity prices are set
We need to start building more power plants and I think we really need to focus on building them in the Rust Belt and Coal Belt. These places have the right workers and right infrastructure. I posted an article in the DT yesterday about a company building a kind of hydroelectric battery out of a coal mine in my region. That’s something we need to do on a massive scale and will cost $50 billion or more. You can also turn them into solar farms. Coal plants can become nuclear power plants but that’s also an expensive process. I’m sure abandoned steel plants can be turned into power stations as well, but I’m not overly familiar with them.
Energy is key to a strong economy and renewables are far cheaper than gas and coal. Democrats need to seize on this issue to drive down costs for consumers while powering tech-based economic growth in liberal states while revitalizing rural and Rust Belt economies.