Thursday, July 25, 2013

Subsidizing the protection of the environment or its destruction?

It would sound absurd to say that we should subsidize the destruction of our environment and we would be much less likely to do that if we phrased it that way; but that is essentially what we have been doing for decades. A closer look at the long list of environmental disasters that could be found if you started Googling them would quickly make this clear. I have done this in several other posts including BP is just the tip of the iceberg. This made it clear that if I kept searching I would have found many other environmental disasters and at times I have without completely compiling them. This could be done with a variety of different types of disasters and the result will surely be the same. The commercial media and political establishment is simply not even trying to report on the full extent of the damage and this enables the energy companies to avoid paying for the devastation they've been doing for a long time.

However partially privatization and regulation, at the local level, of Solar, Wind or Geothermal might work to help reduce this. This would be better with a regulatory system based on a more accurate assessment of the facts but some of it can be done immediately and it already is. Most of what we hear about when they talk about "privatization" seems to mean privatizing things in the hands of the few with political connections. This generally results in an enormous amount of corporate welfare for the rich. A much more rational form of "privatization" would allow people at the local level to have small scale generating solar panels or wind mills for their own use and reasonable regulations to protect them from the excesses of large corporations that have been corrupting the system for decades.

Recently there appears to be a rift between the Koch Brothers and the Tea Party when it comes to who should control their energy policy; ironically the tea party seems to be supporting the use of solar against the wishes of the Koch brothers. This sounds good and it is clearly better than what the Koch brothers have in mind, which enables them to profit while ignoring the destruction of the environment; however it might not be the best way to put control of the energy policy in the hands of the people; and their might be flaws with both these options.

One of the issues involved is the reliance on leases as the following excerpt indicates.

Behind the Tea Party Push For Solar in Georgia

The hot button issue in the state in 2012 was solar leasing, the wildly popular business model employed by companies like Sungevity in California, Massachusetts and elsewhere. Under a solar lease, companies don’t sell solar panels under these contracts—they build small power plants on spare roof space and make their profits on the spread between their costs and the cost of power.

A 1973 Georgia law permits only regulated utilities to provide electric power to third parties. Homeowners can put solar panels on their roof, but they have to own them. If they lease, it’s a violation of the law. Residents and businesses that have entered leases have received cease and desist letter. Complete article

Allowing people to have more options seems to be a reasonable position and I don't see why they should have a law that might have the effect of reducing the amount of solar because they ban the leases; however that doesn't mean the leases are the most effective manner to increase solar. By relying on leases from Sungevity or any other company the home owners still don't own the solar panels and leases have historically been less cost effective for the customer than buying outright. This has been a common problem that has repeated itself over and over again and it often occurs most commonly when large corporations have a major control over any given market and they also have control over the information that the consumer receives about the financing plans.

Examples where corporations have been gouging customers over leasing deals include renting of phones that should have been paid off years ago and concerns about whether or not the customers of ADT own the equipment which might not be presented properly in the fine print. Leasing generally gives more control to the people that hold the lease and they often increase their profits at the expense of the consumer. There might be a few examples where it might be worthwhile, although even then I might be skeptical, but when encouraging large scale reliance on leasing it would definitely be worth taking a closer look and better options would almost certainly be available if the public reviewed all the facts and held their representatives accountable.

I have no doubt that if we tried we could come up with a better plan that would enable homeowners to privatize their own solar panels and perhaps other energy items that might include Geothermal or even wind generators in some cases. In the vast majority of times when the media talks about privatization they seem to mean handing ownership of government property or property that should be part of the commons shared by everyone over to a small group of well connected people that supposedly would handle it better for the best interest of the public; however in practice their top priority routinely involves maximizing their own profits at the expense of the public and they often get away with it when the majority of the public isn't fully aware of the information that impacts policies.

One of the clearest examples in recent history was Dick Cheney's famous energy task force which was implemented in secret with input from oil companies and other energy companies while shutting out environmentalists, human rights advocates, consumer advocates or anyone else looking out for the interests of the majority. When it comes to many of the simple details the commercial media has routinely declined to inform the public about many of them and so has the political establishment; however some lower profile sources including the following excerpt from Dave Roberts do a much better job explaining it.

Utilities vs. rooftop solar: What the fight is about

The conflict between electric utilities and distributed energy — mainly rooftop solar panels — is heating up. It’s heating up so much that people are writing about electric utility regulation, the most tedious, inscrutable subject this side of corporate tax law. The popular scrutiny is long overdue. So buckle up. We’re getting into it.

I wrote about the fight a while back — “solar panels could destroy U.S. utilities, according to U.S. utilities ” — but it’s worth taking a closer look at what’s under dispute. Some bits are unavoidably wonky and technical, but it’s important to understand exactly what’s happening. This is a pivotal issue, a trial run for many such struggles to come. Complete article

If you go to the full article by Dave Roberts, and some of his related articles, I'm sure you'll find that he does a better job explaining some of the details than I do. One of the things that he writes about is the claim that solar panels could unfairly drive the utilities out of business. Without regulations to prevent this I have no doubt this might be true; however it is also true that they never would have been in business in the first place without the regulations that enabled them to get started. Utilities have never been like other businesses that can work on the "free market" if multiple competitors ran lines they would both be too expensive if only one company ran lines they would be a monopoly; which is what we have. On top of that when they first ran lines to many rural areas it couldn't have been profitable for the utilities so the government subsidized some of them.

From the beginning in return for the regulations that benefited the utilities the government required them to abide by additional regulations that protected the consumers; or at least they were supposed to. Prior to the massive “deregulation” efforts the profit margins fore utilities were lower than many other businesses but the risk was also lower since the regulations were supposed to enable them to stay in business and protect the customers. When the "deregulation" efforts took place many people were told would enable the corporations to operate more efficiently if we just trusted them and allowed them to look out for the best interests of the public they could pass on their savings to the public and would be encouraged to by competitions.

Or so we have been told over and over again; however those familiar with the details almost certainly knew all along that it wouldn't work; and with numerous scams including the Enron melt down and many other problems it should be clear that the deregulation efforts were a disaster. A quick consideration of the fact that they haven’t eliminated many of the regulations that protect corporate secrets while they have been eliminating regulations that protect consumers, workers and the environment as well as allowing many companies especially utilities to avoid real competition which they claim would provide them with incentives to provide low prices and high quality should make it clear that deregulation is a disaster designed to benefit the utilities which happen to donate a lot of money to campaigns while consumer advocates and environmentalists don’t.

What we wound up with, instead of "deregulation," was re-regulation that enabled those with political connections to increase their profits while shifting the risk to consumers, increasing prices and reducing the quality of service resulting in more power outages that take longer to repair.

If we’re going to maintain a private system then consideration of their legitimate concerns would be reasonable and allowing them to make reasonable profits for their investments and their risks, assuming they actually take risks would be justifiable. However allowing them to avoid real risk through their political connections or avoid consideration of whether or not community owned or government owned utilities might work better would not be reasonable.

For now I’ll assume that we’re going to stick with the privatized system and consider reasonable regulation that are supposed to be made by elected officials that represent the public equally, or at least they pretend to; and they’re much more likely to do so if the public is well informed.

One of the concerns they have expressed is allowing the owners of solar panels to avoid paying anything is unfair, since they take advantage of the grid even if they produce more electricity than they use. As Dave Roberts describes it this involves “net metering” which enables the owners of solar panels to store excess energy during the day on the grid and use it at night when the solar panels aren't producing electricity. There have been several variations of this policy in many states over the years; but I suspect that in many cases as the deregulation movement has been progressing with the help of lobbyists and campaign contributions the protections for consumers may have been slowly eroding.

At times the utilities may have been required to buy energy from small producers at a regulated rate which almost certainly didn't provide small producer a major profit motive, although it may have added an incentive to those that buy solar panels to buy enough to meet their own needs if they could get a small return on any surplus even if it isn't profitable. And these meters may have been two way so that they often can’t even tell when they have been feeding the grid or when they have been getting electricity from the grid since some of the meters may have gone forward and back; although I’m not certain if modern meters still do this. This could be resolved very simply by allowing the utilities to charge a reasonable fixed fee which the solar panel owners would have to pay, either with surplus power that the utilities can resell to other customers or with money. This would enable the utilities to continue making a reasonable profit off of the power they do sell and it would actually increase the competitions that the utilities claim they have been providing all along although this clearly isn't as true as they claim.

The same could go for wind power as well and for the most part is already does for those that take advantage of Geo-transfer to heat or cool their homes. I haven't heard of nearly as many home owners buying wind turbines as I have of them buying solar panels but there is no reason why it couldn't become much more popular if the regulatory environment is more favorable to clean energy than it is to fossil fuels which come at a high cost that hasn't been figured into the price since they involve an enormous amount of destruction to the environment which the energy companies have rarely if ever been held accountable for. Allowing the energy companies to avoid paying for "negative externalities" or pass these expenses on to the customer essentially means that we have been subsidizing the profits of the energy companies and the destruction of the environment which is already catching up with many people that are already paying the price for it with dirty air and climate change.

It is possible for people to buy wind mills for under $500 although installation will cost more and the smallest ones might not be the most efficient. In some cases it might be better for people to buy them as a group if they can get along with their neighbors. Or if people have enough influence over their local government they can encourage them to buy them for town buildings. This would mean ownership by the towns not privatization but if they're using the electricity it might be the most efficient way to do it. Many people used to understand that it is much more efficient when the middle man can be cut out or minimized but middlemen don't like that and when people start generating their own electricity through wind and solar the utility companies are the middlemen that reduces their influence.

As long as they continue to have an excessive amount of political power then this will be tough but once more people understand the issues then they might not be able to rig the system quite so easily.

There have been plenty of complaints about subsidizing solar or wind from the conservative media and oil companies have been encouraging this; but the real subsidies are for the oil companies. Although they continue to try to pretend the damage they're doing to the environment doesn't exist ignoring it creates an enormous expense which we will all have to pay. There were subsidies in the past to get many of these utility companies started then once they were profitable the political campaign to "deregulate" began without acknowledging the past subsidies and the fact that the regulations were intended to ensure that those subsidies were intended to benefit us all not just the utility companies.

Another major way to reduce pollution and put more control of heating systems in the hands of the homeowner would be Geothermal heating sometimes referred to as Geo-transfer or Geo-exchange. This system is more efficient than traditional systems so it saves homeowners money; however it does cost more to instal so the upfront costs might be more. Taking advantage of financing or geothermal tax credits could enable the home owner to begin saving money immediately though; although the savings might be even greater if they take advantage of the tax credit and pay up front as well. this involved a system that works the same as air conditioning; however instead of relying on the outside air which is hotter in the summer it relies on the cooler temperature of the earth. Heat transfer works just as well in the winter if the process is reversed. the one downside, from an environmental point of view, is that it relies on electricity, which means the increased reliance on coal or perhaps nuclear in most cases. this can be offset by the use of solar panels or wind mills to produce that electricity so the utility companies would be providing minimal amount of services. this is all the more reason why we need a regulatory system that isn't controlled by energy lobbyists that don't have homeowners or the environment as a priority.

According to several stories, including Gamechanger: Next Generation Wind Turbines With Storage Are Cheap, Reliable And Brilliant and Solar Panel Costs Drop, Fueling Rise In Renewable Energy we can take advantage of the drop in production costs for both wind and solar and Geothermal has also been a cheaper way to heat as well and they're all more environmentally friendly than the traditional methods which only seem to benefit the energy companies that avoid paying for their environmental damage.

Unfortunately both the EU and the US have been imposing higher tariffs on Chinese solar panels claiming they have been selling them below costs. This seems unlikely since they wouldn't be able to cover their expenses if they did this for long and it would correct itself eventually anyway if that was the problem. a far more likely reason why they've been able to sell them cheaper is probably their usual reliance on cheap labor. If their concern was workers rights then they would be better off putting tariffs on all items across the board so they couldn't take advantage of the use of cheap labor to compete and this would protect local jobs as well and reduce the amount of items they ship half way around the world. The current version of "Globalization" seems to be designed to enable large corporations to make people compete with each other around the world without real competition among the corporations which have consolidated into a relatively small number of mulch-nationals. This means that they can move their operations overseas abandoning the advantage of factory direct purchases and adding on various additional middlemen and increasing the cost of shipping to drive wages down but the consumer doesn't actually benefit from this. consumers lose primarily in two ways; this has been accompanied by a significant drop in quality and they have to pay for the additional shipping costs and they also have to deal with the added amount of oil required to ship an enormous amount of low quality products that fall apart much faster.

Instead of putting tariffs on items that protect the environment they should be putting them on items that destroy the environment then they could use the money for the financing of the things the protect the environment or single payer health care or something worthwhile instead of unearned profits for those that donate to political campaigns.

While finishing this blog up I encountered an ad for "renting your roof" for solar purposes. Supposedly their are companies that will now rent roof tops and put solar panels which they own on them then sell the energy to other consumers or perhaps the same people they rent the roof from. This is often done by utilities but it is now being done by additional separate subcontractors. The classic saying, "if it sounds to good to be true it probably is," comes to mind. If these companies can make a profit from this and pay for the ad then it has to come somewhere and it is virtually guaranteed that the fine print will create problems for the property owner and if it is so profitable then the property owner would almost certainly be better off buying the panels and selling the power himself.

For additional information on the subject see the following articles:

Geothermal Heat Pumps – Kind of a Big Deal the federal government is willing to pay for 30% of the cost to install them in your home!

Geothermal Energy: The heat beneath our feet

This Old House: Geothermal Heat Pump: How It Works

Koch Brothers Vs. Tea Party Patriots: Georgia Solar Vote Sparks A Surprising Fight

Koch Brothers Fund Effort To Undermine Tea Party Support Of Solar Energy in Georgia

Former Mobil VP Warns of Fracking and Climate Change

Frontline at PBS: Steve Coll: How Exxon Shaped the Climate Debate

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