This post began as a question about whether a resilient and redundant power grid would be a public good which as I composed it took a somewhat different turn. I may be able to move back in that direction. We’ll see.
Have you ever looked at a utility bill? Not just the “You owe this” part but looked at it in detail? My electricity bill and my gas bill look very much the same: I’m billed at such and such a rate for each unit (kwH, therm) I use and to this is added a service charge, taxes, and fees. My cable, phone, water, and cellphone bills are a little different: I’m billed at a fixed rate for the services I’ve contracted for, I’m billed more if I use any additional services, and to that is added a service charge, taxes, and fees.
The service charges and fees are all monthly. You couldn’t contract for a day’s worth of electricity if you wanted to. And here’s my point: the most you’ll ever get from your cable company if they fail to provide the service you’ve contracted for is a pro rata reduction. You’ll get nothing from the power company when the power is out.
Compare that with the register tape you get when you buy groceries. They refund at the unit of measure at which whatever you’re returning is sold at. They don’t refund for a single bad egg.
But we pay the gas, electric, and cable companies for a month of service without necessarily receiving a month of service.
Now I think I may have circled around. It’s obvious that electricity, water, or gas aren’t public goods. You and your neighbor can’t consume the same electricity , gas, or water (rivalrous) and you can have your house connected to the gas company without your neighbor being connected (excludable). Slightly more tenuous arguments can be made for cellphone and cable service (excludable but probably non-rivalrous, therefore club goods).
However, continuity of service is a somewhat different matter. It seems to me that as a practical matter it’s impossible for the electric or gas company to provide reliable continuity of service that isn’t non-rivalrous and non-excludable.
I don’t think I’ve had a month of continuous service from the electric company or the cable company (through which I get my broadband Internet connection) since I moved into this house nearly 30 years ago. I’ve had better service from the gas company and the phone company. The city provides the water and it’s only been out a couple of times over the years.
Why don’t the electric company and the cable company provide continuity of service? It is technically within their capability to provide continuity to a much higher degree than they’re doing. Clearly, they don’t have enough incentives to do so, allowing discontinuity of service helps them realize lower costs, and, since their rates are at least nominally controlled by commissions and the commissions let them get away with their practices, they charge for services they’re not providing.
I don’t take any particular comfort in knowing that my electricity, cellphone, and Internet connection are all likely to be unavailable at the times when I may need them the most. That’s why I keep my telephone landline. The phone company has its own power grid.
Power is out, your usage is nothing, you pay the following (in California–if you have an IOU [Investor Owned Utility]):
(customer charge/bill days) + (KWH*rate)
which works out to,
(customer charge/bill days) + (0*rate)
or
(customer charge/bill days).
In short you are being charged, when the power is out, for the meter and lines and wires, which are still there even if you are using nothing.
Well that is how it works for us. You are a ComEd customer right? If you are, Jesus your tariffs suck ass in terms of figuring out what your rates are. I thought ours were annoying, but by comparison ours are clear, concise and very east to read.
You probably are getting what you’re paying for.
Serendipitously, I ran across this today.
I can see where your going with this Dave; if you separate the electrical product generated from the distribution system, which is the direction the market is moving towards, then the electrical product looks like a pure private good, while the distribution system itself looks like something else.
Excludable? If I don’t pay my electrical bill, I don’t get electricity. The company doesn’t come to my house and dig up the connections. Would they have a legal right to do so? I don’t know, but it would appear to be economically impractical to exclude someone from the system once connected. OTOH, for a new subdivision or house, excludability is certainly the case.
Rivalrous? There would appear to be some physical limitations to multiple electrical lines running through cities, and perhaps legal in the sense that the distributor needs rights to access public and private property to install and maintain.
The distinction I’m trying to make is between, for example, the electricity itself and continuity of service. I’m paying for electricity and I’m paying for service. Service is billed by the month and I rarely get a month’s service. The electricity itself is, obviously, a private good. The service is, slightly less obviously, also a private good.
But what about continuity of service?
Steve V., I think, correctly articulates the power company’s position: even if you can’t get electricity, you’ve still got to pay for the wires, transformers, etc. Who cares about continuity of service?
You are in effect getting two things. The first is the connection to the grid (meter, wires, billing, and so forth). Then there is the electricity itself. Technically you could have two companies, one providing the electricity and another providing the connection/distribution/transmission system. So even during a black out you’d still pay for the latter since it is still there ready to be used and perfectly fine for providing you with the energy. The interruption in service does not change that.
As for who cares about continuity of service, the utilities does care. At least in CA. A big chunk of our revenue for the lines, wires, meters, etc. are in the per KWH charge. So, if we have a black out we wont recovery all that we could have if there was no black out. Of course, our customer charge is insanely low. No kidding, it is $0.88/month for a single family residential customer, or $0.66/month for a multi-family residential customer. However, if we were to set that charge at the marginal cost it would be closer to $15/month or so. So over $14 each month is recovered not through the customer charge, but through the usage (KWH). So, if you lost power for a day here Dave, you ‘d pay $0.029 for having the meter, billing, final line transformer, service drop, etc. The remaining money we wanted to collect…well we’ll have to worry about that later.
I tried to read the ComEd tariffs, but they are a hideous mess, IMO, so I can’t tell if that is how it works where you live.
I believe ComEd split into two separate companies, one is the generating entity, the other distribution. (I don’t if that process is complete yet.) It makes it a little difficult to track why continuity of service is not being provided to Dave. Could be a problem with the generator, or the transmission lines (around here squirrels)
I’m not familiar with your area Dave, but if you’re serviced by a regulated monopoly utility then the utility commission and the utility company are responsible for continuity of service.
Texas, by contrast, deregulated and split energy companies into three functions which you can read about here. In that case continuity of service is still the responsibility of the local, regulated utility.
But here’s the thing. Utilities can’t guarantee continuity of service. I’ve worked in a lot of defense installations where continuity of power MUST be 100% and the US government can’t buy that from a utility at any price. If you want that kind of service, then you need to buy a generator. Every one of those facilities has multiple generators. Same with hospitals, server farms, etc.
Even then it may not be 100%, it might be 99.9999% but not 100%. Suppose you are servicing your generator (they need that from time to time) and you are now taking standby service from the regulated utility. Then a squirrel gets zapped, or a tree branch breaks, whatever….something trips and uh-oh you have no power now.
Still, LOLP (Loss Of Load PLrobability) should be small for most customers. I’d say that here in CA in my neighborhood we lose power maybe 1x to 2x a year and usually not for very long.
here in my neighborhood in downstate Illinois we lose power maybe 1x to 2x a year and usually not for more than a couple of seconds.
I have a municipally-owned utility, which has some good and bad points, but if I had a problem I would go to my alderman and I wouldn’t even need to bring cash.
We lose power here every time it rains, from seconds to hours. I’ve got nearly every piece of electronics on battery backup so they can be brought down in an orderly fashion.
I’m not unique, BTW. Not only does everybody in my neighborhood have much the same experience (obviously) but one of my clients whose office is, perhaps, eight miles from here as the crow flies, has a power outage that lasts from seconds to hours nearly every weekend and at least once a month during the week. The landlord swears up and down that it’s not the building’s fault.
I’d say lodge a complaint with your regulatory agency. We just had a serious rain yesterday (frequency isn’t as great here, but when it does rain in the fall/winter….it rains!) and AFAIK no outages, or if there were they were somewhat limited and randomly distributed. Your problem on the other hands sounds different like faulty equipment somewhere.
Heck, your utility should provide some sort of service to evaluate this, but I’m guessing you’ve already called them….so go to your regulatory agency, make a complaint. If nothing gets done, escalate it.
Here in Chicago clout is everything, even in the simplest, most mundane issues. The only way I would go to any regulatory agency at any level is wielding clout like a brickbat. I know how to play that game and have done it before when it really mattered to me. I only have so much time and energy.
That sucks Dave.
I had power issues when I lived in Florida – specifically a loss of voltage whenever the A/C kicked on (which was, as you can imagine, pretty frequent) I called the utility, they sent a guy out two days later and put a special meter on my feed. Two days after that they came back, determined that the problem was the transformer on the pole. They replaced it the next week and everything was grand.
I imagine there must some benefit to living in Chicago besides the great weather?
That sounds about right. I can’t think how we’d handle it much different.
Recent Ill. S.Ct. case throws out lawsuit against ComEd for power outages following bad weather:
http://www.state.il.us/court/Opinions/SupremeCourt/2011/June/110166.pdf
(Tariff on page 8)
page eight