ARCHIVE

  • Last modified 135 days ago (March 17, 2021)

MORE

More power to you?
Not exactly

Even as spring is arriving, this winter’s record-setting cold snap is set to freeze bank accounts all over the county as both Marion and Hillsboro struggle to determine how much of sharp increases in electric rates to pass along to city residents.

Hillsboro got things started Tuesday by discussing adding a more than 8% surcharge to rates for 21/2 years to pay for less than 21/2 weeks of extra electric costs this winter.

Although Marion has yet to act, it probably will fall in line and, like Hillsboro, attempt to minimize the increase by characterizing it as only 0.01 per kilowatt-hour.

Yes, both numbers are accurate: We’re talking a increase of more than 8% every month for 21/2 years or “just a penny more.” They’re the same thing, though one of them “spins” better than the other.

At a time when wages for most workers have either decreased or stayed the same, and consumer prices have increased less than 2%, an 8% increase in electric rates seems excessive.

That’s especially true when most of the reason for rapidly rising prices is that utilities hadn’t planned to have enough power available and needed to resort, during the cold snap, to buying fuel on an expensive spot market.

The challenges become even more problematic — one might, in fact, call them powerful — when you consider something that most cities only reluctantly reveal. Historically, they have made huge profits on electricity they resell and depend on those sales to provide a huge portion of their annual budgets.

Cities claim this profit helps reduce property taxes. In truth, higher-than-necessary electric rates are a far more insidious tax — one that hides from the scrutiny of concerned citizens trying to rein in government spending.

None of us see how much extra we’re paying for electricity sold to us by our city, and the charges don’t come in one huge bill once a year, like property taxes do. But many of us may be paying a bigger share of government’s cost through our electric bills than we are through our tax bills.

Financing government by marking up the cost of electricity is one of the most regressive forms of taxation imaginable. Those least able to pay tend to be hit the hardest.

Wealthy or poor, everyone uses roughly the same amount of electricity. The poor might use even more because they tend to live in less insulated homes with cheaper, less efficient climate control and appliances. They also tend to have more young children, which means more lights, more flickering screens, and more washer and dryer runs

The argument for passing along 100% of increased costs cities might have to pay for electricity they re-sell is that failing to do so might disrupt city budgets. If such budgets include, as Marion’s does, employee raises that exceed this year’s increase in the cost of living, maybe that wouldn’t be such a bad thing.

As is, maybe city governments need to adopt a slogan to replace the old “I want you” from Uncle Sam. These days, a more appropriate image might be Tom Bodett saying, “We’ll leave the light on for you.”

— ERIC MEYER

Last modified March 17, 2021

 

X

BACK TO TOP