What makes you think that anyone other than the Utility should absorb
the losses? Did anyone other than them take the profits? The billions
they invested did not come with a warranty from the government did they?
If they want the public to underwrite the risks then they should be
public owned not private.
Offgridman
Lets see now, the PSC granted the utility a monopoly in providing electric
power, PROVIDED the utility agree to certain stipulations. One of those
stipulations is the utility *MUST* build plants of sufficient capacity to
supply future demands *as predicted* by the government, *not* the utilities
predictions. If they do *not* build for sufficient capacity to meet public
demand, the government would simply revoke their right to operate as a
utility in a service area.
So the government *forces* the utility to invest in plants and only allows
the utility to recover the cost over a 40-year amortization. Yes, FORCES
the utility to build them. And yes, they DID come with a warranty from the
government that they would be able to recover all 'just and prudent' charges
from the rate payers *and* make a small, fixed profit. These are agreements
that were in the rate-tariffs passed by a government body with the effect of
LAW.
The utility agreed to this because they were *guaranteed* a small, but
predictable profit. Remember how utilities were a bastion of conservative
investing? They would always pay their dividend to stockholders because
their profit was fixed by the PSC. Only gross mismanagement or costs that
were not 'just and prudent' would be disallowed from the rate base. In
fact, anyone selling electric power retail that was *not* under the control
of the PSC could be taken to court by the utility as infringing on their
'government-granted monopoly' (except for a few small NUG exceptions). That
is, the utility had an exclusive license by the government to sell retail to
the public.
But BANG, the government changes the rules. Yes, the utility was forced to
expand generation over the past 30 years, but we're sorry, you have to sell
that plant now at 'firesale' prices and you don't get to keep charging the
rate payers to pay back those bonds you wrote.
THAT is what stranded costs are all about. Government *forced* an
investment with *promise* that the costs could be recovered from the rate
payers in exchange for the right to operate a monopoly. Then the government
changed all the rules after they've made the investment so they cannot
recover the costs and others are allowed in to compete with the utility.
As far as saying the utility *should* have been a public government entity
and not a private company, that is mere speculation and *not* what
*actually* exists.
So the utility was forced to make an investment, the government forced the
utility to sell. Before, the utilities profit was limited by the government
and now the government is forcing utilities to sell off income-generating
assets at a loss.
If you were forced to sell your PV system at a loss and forced to buy power
from your competitor, simply by the stroke of the legislative pen, should
you absorb all those losses yourself??
daestrom