Economic Multipliers (51)

Do you know what these are?

They help CREATE wealth in systems.

Regulated utilities are economic multipliers.


I don’t live off-the-grid but probably know more about it than most people. Over the years, I’ve done rather extensive research in a number of areas: energy (solar, wind, water, wave, geothermal, etc. (there’s more!)), water, sanitation, food production, health care, tool, equipment and material production, etc. I’ve also looked at much of the math … what you many times don’t see when you read articles on off-the-grid living.

I’ve also ‘dabbled’ in some of these areas to see how easy it is to produce goods and services and how practical it is to use things like solar cookers (particularly in cold weather climates). Hundreds of thousands of other people across the globe have ‘dabbled’ also: I’ve even met a few who have literally set up their own public utilities in that they sell excess power (that they produce via hydropower or solar plants) back into the grid.

One conclusion I’ve come to from all of this is that most people should never want to own their own public utilities because they require knowledge, investment, upkeep and maintenance. You need all four of these to make sure that things go right.

I live in a state (Wisconsin) that did NOT fully DEregulate ‘the electrical grid.’ As a result, rates for power (electric and gas) have gone up but not significantly over the years (and the public service company must apply for and justify the rate increases).

Initial good planning of this ‘regulated’ system means:

    • it is less likely that rates will spike,

    • the company has construction, upkeep, maintenance and training built into its rates and spends money in those areas so the quality, reliability and consistency of the services are high,

    • emergency response is quick and in the area where I live, power outages are rare (~1 per year) and usually last less than four hours,

    • the company has money to help support professional, technical, and service support training programs in the community for linemen, power plant workers, electricians, engineers, and support personnel which means that the service quality will stay high,

    • a small fee (a tax) on the energy bills helps support energy assistance programs for people who have difficulty paying their bills, and

    • the public utility has a linked-to-others support program and can and does send equipment and trained crews nationwide in emergencies.

I personally couldn’t do any of this better or the same without a lot of extra time, money (and even extra knowledge).

If I lived in a state which was DEregulated (for basic energy delivery), I’d probably think differently because I’d expect that for higher energy rates, I’d be getting less service. I’d also expect that over time, the quality would be deteriorating (because the competition that would keep quality high would not exist).

I also couldn’t provide my own water or sanitation facilities better (or even the same) and am ‘lucky’ that the generations that went before wanted these services to be affordable, placed them in ‘regulated’ environments and linked them to educational programs and funding programs geared toward maintaining high levels of quality and reliability.

At the same time, I applaud people who live ‘off-the-grid’ and do it well. If enough of those individuals plopped themselves down in a less developed nation, the very first thing I’d expect them to start doing would be building small community power plants (that’s a compliment related to their knowledge, skills and ingenuity and that’s how it all got started in developed nations).

I applaud people who reduce their energy usage and thereby minimize the number of power plants which must be built and maintained. Power companies don’t really want to build more plants … AND they really want us all to learn how to better use electricity during off-peak times and figure out ways to minimize the excess power that is required when equipment first starts up. (Note: If we continue to move toward a world with more electric transportation and battery power, off-peak times are the perfect time to charge batteries and some extra built-in power storage (battery or capacitor) for certain kinds of industrial equipment could help reduce startup loads).

I am glad that if I would produce excess electricity, I have the option of selling it back to the power company. I know that every alternative energy source that minimizes our carbon footprint is like stacking sands of grain to build a mountain … and 7 billion people (the approximate population in the world today) have the potential to build a lot of mountains (although since the United States uses (per person) an ‘abnormal’ amount, perhaps we should be contributing a few more grains per person and not expecting some others to contribute any at all). I am also glad that if I would produce energy, I still have the ‘reliability’ of ‘the grid’ (and all those well-trained public service company workers in the event of an emergency) to back me up:

    • People rarely appropriately value the things that already exist so sometimes they forget that those things still need adequate support.

    • People sometimes forget that most of the ‘large’ infrastructure in the developed world originally evolved from small business and community systems (WHEN it made sense to combine those systems for greater reliability, efficiency and lower community costs). (If a community cannot see where it can develop a revenue and tax base to support a system BECAUSE of the economic development it would create in that community, a system may need to be ‘re-thunk’ (not technically a word)).

    • People sometimes minimize the value of letting people ‘live off-the-grid’ or outside of the mainstream of traditional infrastructure (as long as no community health problems arise) when they fail to consider that the knowledge those people glean by doing so might be the very knowledge needed if the world needs to more quickly transition to alternative sources of energy or deal with some environmental catastrophe.

For instance, in an area that gets a lot of (or sufficient) sun where power might not be consistently available, I might want to first own some ‘walk-through’ lighting (not enough to read by) that makes an area safer (some solar garden lights provide this). For reading at night, I might just want to figure something out that gives me hi-quality spot lighting. For moving from place to place, I might always want a windup flashlight available (the energy is stored in a capacitor … and sometimes a rechargeable battery … but those need to ultimately be replaced so if you don’t have any capacitor capacity, you have a less reliable minimalist lighting system).

Another conclusion that I’ve come to over the years is that developing nations should value (and copy) the education and training (of the more developed nations) that originally helped create quality and reliable products and services BUT should build infrastructure that fits their own needs:

    • If I lived in an area with double or more the solar insolation, I would think totally differently about energy infrastructure.

    • If I lived in a hot and humid area, I would think totally differently about the energy systems, water supply systems and even sanitary systems than I would if I lived in a hot and arid area.

    • If I lived in a rainy, overcast area, I’d want to think about how all that water could be used to power things. And, I’d need to go on lots of walks to figure out how all that water moved AND to take care of my own infrastructure.

The developed nations didn’t get everything right: If we did, we wouldn’t be dealing with so many problems in the world today and the poorest of the poor would be building their own lives from stronger bases of community wealth.

And, if someone wants to convince me that DEregulating the energy markets for the most basic of energy needs (which was done in many states) was of benefit to your average consumer, the public utility company that serves me set an awfully high benchmark to compare against.

I started this piece by saying: Regulated utilities are economic multipliers.

I will end this piece by saying: Regulated utilities are economic multipliers IF they make economic sense for the people in the communities in which they serve … and sometimes, even if they do, communities may need to consider ways to transition which build greater bases of wealth and economic opportunity first so they have greater revenue and tax bases from which they can draw. And don’t forget, the revenue and tax bases need to cover these four things (IF you want things to go well):

    • knowledge (education and training),

    • investment (If YOU can see the ability to pay for something, you’re in good shape. If someone else just knows you can, think twice (or more).),

    • upkeep (the system upgrade components), and

    • maintenance (the annoying routine work!)