“Are You The Man That Turns Off The Power?”

When I first started working after college I was an auditor for a “Big Six” public accounting firm. Through the (bad) luck of the draw, I was assigned to work on utilities and government institutions. Since utilities are distributed across the United States geographically (unlike finance which is concentrated in New York, for example) I had to travel across the midwest in order to serve my clients.

On one of my first trips I sat next to a couple, a mother and a young son. After a while we started talking a bit on my way to Sioux City Iowa (to see Iowa Public Service, which has since been bought up by Berkshire Hathaway as part of MidAmerican Energy). They asked me why I was traveling to Iowa (a good question, actually) and I said that I was an accountant working for the local power company. The child piped up and said:

“Are you the man who turns off the power?”

The mother was embarrassed and we immediately changed the subject but clearly their family had their power cut off for non-payment at some point in the past and that is how the child knew of the power company. We had some stilted conversation from then on but the encounter has stuck with me for years.

If you ever work at a power company (gas, electric, water) you can see the difficulty that the poor face in trying to pay their bills. Unlike other bills (credit card, banks, etc…) if you don’t pay your power bill, they will cut off your service. There are rules that the utilities can’t cut you off in the winter (so you don’t freeze to death) but you can bet that come spring they will be out there turning off the juice, so to speak. Not only that, but if you are a poor credit risk they make you put down a deposit. Once when I was a renter in a tony North suburb of Chicago they made me put down a cash deposit before they’d hook me up; just by being a renter I was tarred as a bad credit risk.

This article, “Affordably green”, is from the Sunday Chicago Tribune. The article is full of smiling families about how green technology is being applied to all kinds of income levels.

The one line which stuck out to me, however, was:

“Lower income families spend nearly 17 percent of their income on energy costs”.

The price of electricity, gas, and water is not “progressive” like the income tax. Every household pays the same rate for use, whether you are rich or poor. On a per-unit cost basis, the poor actually pay MORE than other types of users because large volume industrial or commercial users receive a discount due to their purchase volumes. For gas prices at the pump, the cost is the same for everyone, and particularly damaging to those living pay check to pay check.

Ever wonder who pays for all those law suits the environmentalists come up with to sue the local power company? The customer. Ever wonder who pays for all the emissions clean up (scrubbers, clean coal) and for the more costly technologies like natural gas against plentiful US coal? The customer. Who pays for the fact that it takes 20 years of red tape and permits to build a transmission line? The customer.

Not only that, but the grants that fund all these non profits usually come from cities, counties and governments. How do they pay for this? Tax revenues, and utility taxes make up a sizable portion of their take from the public. Look at any utility bill and you can see that it is riddled with tax after tax, and you can’t even see the impact of other taxes levied on the utility (property and sales taxes) because these are built into the rates.

Thus I would love for all those doe-eyed environmentalist believers to go to a utility and volunteer THERE at the customer service window for a while and watch the poor decide whether to pay the power bill or buy medicine. They can watch people decide on back to school clothes and supplies or the gas bill. These are real choices, and they will become more and more evident should the economy go into a spiral.

There are no two ways about it – 17% of the income of the poor goes to energy bills which are VASTLY inflated by taxes and regulation, without which the cost of energy would probably be 50% lower (or more… we are the “Saudi Arabia” of coal). Think of this next time they volunteer at a soup kitchen or go on a clothing drive… couldn’t they accomplish the same exact thing by working to lower the costs of energy for the poor so that they’d have more income in their pocket?

Cross posted at LITGM

8 thoughts on ““Are You The Man That Turns Off The Power?””

  1. Carl,

    No, no, no…you don’t understand about the environ-mentalists…they are on the side of the environment, so no matter what course of action they take or propose, they couldn’t possibly be wrong! Clearly since they are on that side, anyone who disagrees with them is logically against them and is on the other side and is AGAINST the environment.

    All that matters is that you feel good about what you are doing…and the you are someohow fighting the machine. The actual consequences are of little importance. Hence the huge popularity of the GREEN(TM) revolution. That it really does nothing is not important…but it medicates the masses that adhere to it…so it remains a powerful movement.

    remember – it doesn’t matter how much you personally consume from the environment, what matters is that you think that it’s not right to consume too much and let others know that they should not…

  2. If they did volunteer at the customer service window, most of them would merely be reinforced in their concusions that (a)the power companies are making too much profit, (b)technologies that are both “green” and cheap are being withheld from the public, and (c)consumerist American society is forcing people to use too much energy, anyhow.

    Koestler on closed systems:

    “it is a system which cannot be refuted by evidence, because all potentially damaging data are automatically processed and reinterpreted to make them fit the expected pattern. The processing is done by sophisticated methods of causistry, centered on axioms of great emotive power, and indifferent to the rules of common logic; it is a kind of Wonderland croquet, played with mobile hoops.”

  3. Your point about how much costs are inflated by taxes and regulation is a good one. It applies to most goods and services. Because such costs are usually hidden, most people, I suspect, have no idea how much government and litigation are costing them.

  4. It’s not just paying the bills. It’s also about jobs.

    To move up in the world, the poor need good jobs that require acquired skill but little education. Factory work, technicians, mechanics etc are all good ways for poor people to move up. High energy cost make those jobs more rare, especially high electricity cost.

  5. .


    My own perception is that liberals possess a very special “Midnight Reset Button”, which metaphorically resides in their brains.

    You can sit a liberal down, start with a premise of theirs and the supposed purpose behind it. Then take them, step by logical step, and show how the premise leads inevitably to the direct opposite result of the supposed purpose. And when I say, “step by step”, I really mean that — they are following it and actually agreeing with the step-by-step reasoning, you can see it in their eyes (i.e., it’s not just mindless agreement). And, at the end, you’ve shown them that the premise that they support leads to the wrong result. Clearly, it is wrong to support the premise in question.

    See them two days later, and it’s as if the conversation never happened. They advocate for that imbecilic wrong-headed premise as though no discussion had occurred.

    The liberal brain, upon performing its in-sleep midnight inventory of concepts and thoughts for integration from short-term memory to long-term memory, has identified heresies and dogma which are clearly at odds with Officially Accepted Liberal Doctrine(tm). The reset button kicks in, “ANNNK!! ANNNNK!! ANNNKKK!!! An-a-lyze! Errrr-OR!! An-a-lyze!!” and immediately acts to purge the foreign, unacceptable ideas from the brain, and restores the proper OALD(tm) concepts back into place.

    The “Liberal Midnight Reset Button”. It’s not just a theory. It’s a proven actuality. Go on. Make your own tests. They’ll confirm it.



  6. We should know that the consumer always is stuck paying the taxes of a company, but what I want to know is this:

    Who gets the fines that the corporations pay? When said polluter is fined for damaging the environment around Main St and 1st Ave in Podunk PA, where does the money go? The residents of the neighborhood that were impacted never see the money, and will probably have to foot part of the bill in higher costs.

    If the offending industry is fined too much, they will just move to a different jurisdiction or maybe they are even run into insolvency, causing a loss of employment in the neighborhood. Yet the entities levying the fines never seem to care about the “unintended consequences”

  7. OhBloodyhell;

    You probably believ what you say. Where is you PhD is neuroscience from?

    What I find interesting abotu thread regarding regulation and lawsuits is that there, as usual are no specific examples. No example of what kind of lawsuits should be limited. What kind off regulations should eliminated.

    It is very easy top be ideological when it is just theoretical.

    Regarding the green revolution: Wouldn’t having alternative energies decrease oil prices and then every consumer benefit? What does the U of Chicago econ think about that one? Why wouldn’t you want to subsidize alterntive energies and much as oil or coal companies?

  8. We have been subsidizing alternative energies for years, since the 70’s.

    Yet they make up a microscopic share of our total energy demand.

    We won’t build coal, nuclear or even leverage the hydro right in front of us.

    We will just pay more as the gas plants set the market rate.

    Meanwhile, China puts a coal plant on line every few days without pollution controls. It is all “one air” right?

    Our energy policy is an utter failure.

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