FLORIDA US. NEW MEXICO

Friends of free enterprise will be cheered by the way the US Senate has, at the time of writing, made a shambles of President Carter' s pro-tax, anti-energy program after Speaker O'Neill sledgehammered it through the House. It remains to be seen whether the deregulation of natural gas will survive a conference committee, and whether the reinstatement of the breeder will get past a veto by the President who proposes energy conservation by letting a millenium's worth of nuclear fuel go down the drain. If there is anything attractive in Carter's program, it is its professed encouragement of eo-generation, the use of process steam to generate electricity in private industry, with surplus poster sold to public utilities (AtE Apr.76). It is a method that could keep the price of electricity down by competition rather than by regulation. At present, however, the price of electricity is being set by regulatory commissions subject to political pressures and often unconcerned about the need to reinvest profits in new capacity. In Florida, for example, the counterfeit consumer advocates have succeeded in forcing an "inverted rate structure" on Florida P&L consumers pay more per k Wh the more they use. The sliding scale of increased costs has been determined by bureaucrats who know how much electricity is good for you. It is much like pricing both toothpicks and lumber by the weight of wood, with toothpicks costing less per ounce. Just as toothpicks cost more to make (per ounce) than lumber, so does electricity cost more to deliver in small quantities 30% of utilities' fixed costs are distribution costs, of which only a small part is applicable to large industrial users. Even without inverted rates, large industrial users to some extent subsidize residential users: Residential service amounts to 43ff10 of a typical utility's costs, but its users pay only 34% of revenues. Of course, in the end, it is the consumer who pays anyway; and in Florida, he is going to pay through his nose: For 3,000 kWh (not unusual during summer months), the consumer advoeates will saddle him with a monthly bill for $118.75. In New Mexico, on the other hand, the utilities commission allowed the P.lhl Cord En tn rhino its rates anallah tn maintain a return of between 13.5'Mo and 14.5Vo on stockholders' equity. PSNM files a statement every 3 months for the preceding 12 months, and the rates are automatically indexed (i.e., increased) without bickering.