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Bob Meinetz's picture
Nuclear Power Policy Activist Independent

I am a passionate advocate for the environment and nuclear energy. With the threat of climate change, I’ve embarked on a mission to help overcome the fears of nuclear energy. I’ve been active in...

  • Member since 2018
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  • Oct 25, 2021
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"Jones, a supporter of offshore wind who still is concerned about the costs of the Dominion proposal, was part of a push earlier this year to reform laws that govern the SCC.

That package of bills would have given regulators greater discretion, barred utilities like Dominion from retaining excess profits and removed a 2018 cap placed on rate reductions. Many of those measures failed, but Jones plans to raise his concerns again next year.

As a utility, Dominion’s revenue stream largely comes from building new infrastructure and passing that cost on to ratepayers with a regulated return on its investment. So rules governing what utilities can build and how much they can collect are pivotal issues for regulators to be able to ensure a fair system, experts say." [bold mine]

Exactly the same in California. If you thought you were buying electricity when you paid your electricity bill, think again: you're paying your utility "to build stuff" - the more solar and wind farms it builds, the more money its shareholders make. Whether they're cost-effective, or not. In economics it's known as the Averch-Johnson effect:

"The Averch–Johnson effect is the tendency of regulated companies to engage in excessive amounts of capital accumulation in order to expand the volume of their profits. If companies' profits to capital ratio is regulated at a certain percentage then there is a strong incentive for companies to over-invest in order to increase profits overall. This investment goes beyond any optimal efficiency point for capital that the company may have calculated as higher profit is almost always desired over and above efficiency."

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