4 ms·

Using tax money to subsidize higher rates on certain areas is roughly the same as just charging people all a slightly higher rate. “The people” in expensive ar

Using tax money to subsidize higher rates on certain areas is roughly the same as just charging people all a slightly higher rate. “The people” in expensive areas have literally no agency in finding an efficient solution. They don’t have any say about the utilities grid investments. In most parts of the country “these people” are also poorer.

jltsiren 2y ago
Economic efficiency comes from accurate pricing. If grid power is artificially expensive in urban areas, people will install solar panels and batteries in situations where it doesn't really make sense. And if grid power is artificially cheap in rural areas, people will not install solar panels and batteries in situations where it makes sense. Thus incorrect pricing leads to inefficient investments. Many economists even argue that the most efficient form of subsidies is cash that can be used for any purpose. Instead of getting cheaper power in rural areas, you should simply receive $X/month for living there. But the assumptions needed to make that claim are a bit too restrictive for many real situations.
- jncfhnb 2y ago
  Economic efficiency gains from specific power pricing are vastly undermined by the huge positive externalities of having electricity. Solar panel and battery investments reduce your demand for power from the grid, and in many rate cases will reduce your energy bill, but they _won’t_ reduce the costs of maintaining the distribution grid assets connecting you to the grid that need to exist even if you only use them 0.1% of the time. People with solar panels are the worst offenders as they can end up paying nothing, or perhaps even net receive money, despite still requiring investment from the utility. Accurate pricing of power is very very difficult. Whose energy should cost more? The 10k residents with 5 miles of overhead lines being undergrounded this year? Or the 1k with 15 miles of overhead lines that won’t be under grounded for 5 years? Are you prepared to impose a $50M capital investment cost solely on the consumers that use it? Uh oh. Turns out customers oppose an huge hike in their energy bills and are demanding you DONT underground their lines. Are you going to charge consumers extra because a car ran into a pole that’s specifically on their feeder? The risks of something like a forest fire affect everyone, even if it’s on a line that serves just one person. This stuff is very complicated. The elephant in the room is that under grounding distribution networks in places like California is simply far too expensive for the kind of budgets they have.
  - jltsiren 2y ago
    I've never really understood why undergrounding the grid is so insanely expensive in California. In Finland, installing a 20 kV underground cable costs something like €50/m + VAT, which is $100k/mile.
    - jncfhnb 2y ago
      That might be achievable in rural areas in America The issue is generally that American grids have WAY MORE overhead line miles than European grids
  - phonon 2y ago
    Why do you need to be connected to the grid .1% of the time? A 12kW solar roof system with two Powerwalls costs less than $75k, with costs continuing to trend downwards, and large government subsidies on top of that. Amortized over 20 years it's reasonable, and much safer for fire prone areas. You can have a backup generator as well if you want to be totally confident.

jltsiren 2y ago

Economic efficiency comes from accurate pricing. If grid power is artificially expensive in urban areas, people will install solar panels and batteries in situations where it doesn't really make sense. And if grid power is artificially cheap in rural areas, people will not install solar panels and batteries in situations where it makes sense. Thus incorrect pricing leads to inefficient investments. Many economists even argue that the most efficient form of subsidies is cash that can be used for any purpose. Instead of getting cheaper power in rural areas, you should simply receive $X/month for living there. But the assumptions needed to make that claim are a bit too restrictive for many real situations.

jncfhnb 2y ago
Economic efficiency gains from specific power pricing are vastly undermined by the huge positive externalities of having electricity. Solar panel and battery investments reduce your demand for power from the grid, and in many rate cases will reduce your energy bill, but they _won’t_ reduce the costs of maintaining the distribution grid assets connecting you to the grid that need to exist even if you only use them 0.1% of the time. People with solar panels are the worst offenders as they can end up paying nothing, or perhaps even net receive money, despite still requiring investment from the utility. Accurate pricing of power is very very difficult. Whose energy should cost more? The 10k residents with 5 miles of overhead lines being undergrounded this year? Or the 1k with 15 miles of overhead lines that won’t be under grounded for 5 years? Are you prepared to impose a $50M capital investment cost solely on the consumers that use it? Uh oh. Turns out customers oppose an huge hike in their energy bills and are demanding you DONT underground their lines. Are you going to charge consumers extra because a car ran into a pole that’s specifically on their feeder? The risks of something like a forest fire affect everyone, even if it’s on a line that serves just one person. This stuff is very complicated. The elephant in the room is that under grounding distribution networks in places like California is simply far too expensive for the kind of budgets they have.
- jltsiren 2y ago
  I've never really understood why undergrounding the grid is so insanely expensive in California. In Finland, installing a 20 kV underground cable costs something like €50/m + VAT, which is $100k/mile.
  - jncfhnb 2y ago
    That might be achievable in rural areas in America The issue is generally that American grids have WAY MORE overhead line miles than European grids
- phonon 2y ago
  Why do you need to be connected to the grid .1% of the time? A 12kW solar roof system with two Powerwalls costs less than $75k, with costs continuing to trend downwards, and large government subsidies on top of that. Amortized over 20 years it's reasonable, and much safer for fire prone areas. You can have a backup generator as well if you want to be totally confident.