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Why do local utilities companies subsidize programs that cut their revenue?
Posted by: space-time
Date: July 10, 2007 10:11AM
You know, the electric company will give a rebate if you buy a new fridge or a new AC, and sometimes they subsidize CFL and other energy efficient appliances.

Why? These CUT into their revenue/profits. I understand and approve this from an ecological point of view, but I do not understand them from a business point of view. Everyone else wants to sell more, not less.
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: MacMagus
Date: July 10, 2007 10:15AM
They get reimbursed by the government.
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Dennis R
Date: July 10, 2007 10:16AM
Why do graphic artists and others buy faster computers when they charge by the hour?
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: BigGuynRusty
Date: July 10, 2007 10:19AM
First, tax cuts.
Second, they can put off having to build more power plants.
Third, they can stop buying power from other areas which cost them $$$$!

BGnR



"Good heavens, Miss Sakamoto! You're beautiful!"
"If we dig precious things from the land, we will invite disaster."
"Near the day of Purification, there will be cobwebs spun back and forth in the sky."
"A container of ashes might one day be thrown from the sky, which could burn the land and boil the oceans."
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: spacescape
Date: July 10, 2007 10:23AM
Quote
Dennis R
Why do graphic artists and others buy faster computers when they charge by the hour?

We just raise our rates and get 25% less work but make 50% more $$$$... Works great!!!
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Dennis R
Date: July 10, 2007 10:25AM
Hey Big Guy,

Don't they get investment credit and depreciation on building new power plants.
Why would they put them off if they make them money?
Third, even when they buy it from somewhere else don's they add on their charges so they make their profit anyway?
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: davemchine
Date: July 10, 2007 10:35AM
I believe power companies are all regulated and must sell power at a set rate regardless of wether or not they generated the electricity or bought it somewhere else at a higher cost.

Building new power plants is extremely difficult from what I've read in the papers. Nobody wants to live next to a nuclear/coal/oil power plant. Even the new wind plants have gotten alot of resistance here in the NW.

Dave



Ukulele music I couldn't find anywhere else.
[colquhoun.info]
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: BigGuynRusty
Date: July 10, 2007 10:37AM
Quote
Dennis R
Hey Big Guy,

Don't they get investment credit and depreciation on building new power plants.
Why would they put them off if they make them money?
Third, even when they buy it from somewhere else don's they add on their charges so they make their profit anyway?

If they could build them, no one wants them near their property "NIMBY", and despite investment credits and tax breaks, it still takes millions to build a new plant "Up Front". It makes them money on a 30 year plan where most investors want a return tomorrow.

They cannot jack up power rates like gas stations can jack up gas prices. They have to ask for a rate increase.

BGnR
Man, I gotta type faster!



"Good heavens, Miss Sakamoto! You're beautiful!"
"If we dig precious things from the land, we will invite disaster."
"Near the day of Purification, there will be cobwebs spun back and forth in the sky."
"A container of ashes might one day be thrown from the sky, which could burn the land and boil the oceans."



Edited 1 time(s). Last edit at 07/10/2007 10:38AM by BigGuynRusty.
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: mattkime
Date: July 10, 2007 11:09AM
politics makes it easier to "upgrade" an old power plant rather than build a new one. many people would be shocked to know how much coal we burn for electricity.

I wish this could become a campaign issue. we need to get past our anti-nuclear attitudes. (coal plants produce _more_ radioactivity than nuke plans). or maybe we enjoy market fluctuations every time a middle eastern country gets constipated.



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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: DaviDC.
Date: July 10, 2007 11:16AM
Why do they advertise on TV & radio when they are a monopoly?



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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: JoeH
Date: July 10, 2007 11:36AM
Most electricity service has been deregulated. The utilities here and many places elsewhere were required to divest their ownership of generating facilities. The incentive to them now is that every megawatt of power they don't have to buy at peak periods saves them a considerable amount. They can contract for delivery of power to meet their base needs at lower prices. Peak power goes for a premium in the market now.

As for building a new plant, since the utilties are no longer able to own one, they are dependent on other companies investing in the expense to do so. So far most construction I am aware of in this area has been expansion of existing plants. The one new plant put in a few years ago was a gas fired plant designed to sell into the peak power market.



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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Filliam H. Muffman
Date: July 10, 2007 12:16PM
Where I live now, everybody gets charged about $5 per month just to be hooked up to the power company. If an average electric bill was $50/mo and everybody cut their consumption by 20%, it would allow the electric company to hook up one more new house for every 5 customers and make another $5.



In tha 360. MRF User Map
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Dakota
Date: July 10, 2007 12:31PM
Let me see. If NOT selling more power makes them money, selling no power should make them even more, no?
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Racer X
Date: July 10, 2007 12:33PM
energy credits used to offset poluting generation plants is one reason.

My drinking buddy is an EE for the power company, and a plant manager for 2 generating plants here in Puget Sound. We covered this in a bar conversation a few months ago.
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: JoeH
Date: July 10, 2007 01:30PM
Quote
Dakota
Let me see. If NOT selling more power makes them money, selling no power should make them even more, no?

Well, in some cases that actually works out. The utility has some approved rate based on blending contracted for base power and market purchases of peak power at whatever the going rate is on a particular day. If the cost of the variable purchases goes higher than estimates in advance, it costs the utility. Can't make a profit on power purchased at 15 cents per KWH if the approved rate they can charge customers is 12 cents.



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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Jimmypoo
Date: July 10, 2007 01:46PM
I'm going to get an old Ford generator and attach it to a bike, and demand a subsidy! NIMBY? Hell -- it will literally BE in my backyard!
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Racer X
Date: July 10, 2007 02:14PM
You'll have thighs like ham hocks in no time!.
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Re: Why do local utilities companies subsidize programs that cut their revenue?
Posted by: Jp!
Date: July 11, 2007 06:13AM
Quote
DaviDC.
Why do they advertise on TV & radio when they are a monopoly?

When I worked for the phone company, they were a monopoly and advertised. Their revenue under regulation allowed them to make 15% above their operating costs. So, selling more (add-ons like caller-id, etc) got them even more money.
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