Friday, October 25, 2013

Someone Else's Electric Bill

What does “economic understanding” mean?  Simply put, there is no magic money tree, no source of funds that somehow doesn't affect each of us as a consumer or a taxpayer.  Corporations spend money they get from customers.  Governments spend money they collect through taxes – or money they borrow based on the promise of future tax collections.  (Those federal funds that contribute to or pay for so many local projects are not free money.)

Another timely example comes from the Indianapolis airport where they have completed a large solar farm.  Panels collect sunlight and convert it into electricity, which is sold to the local utility.  It is expected to generate enough power “to supply the electrical needs of about 1,800 average-sized houses.”

Here’s the catch.  “The sun-generated power will cost three to four times more than IPL can sell it for, so the utility will subsidize the difference by raising rates to its customers, a utility official said. The increase in electric bills to subsidize the solar farm amounts to several cents a month on the average customer bill, the utility has said.”  It's right there in the article for all to read:  The utility will spread the cost of the higher priced power across the bills of all its customers.  Those who live near the privately-owned solar farm should remember as they drive by that they are helping to build and run it every time they pay their slightly-higher electric bill.

The article goes on to say:  “Solar farms also benefit from federal tax credits.”  That really means that those who live in other parts of the country and never benefit from this three-to-four-times-more-expensive electricity also have contributed through their tax dollars.

Perhaps this (Taiwanese-owned) solar farm is a good idea in light of concerns about pollution and other disputes about wiser, more sustainable sources of electricity, but never forget that theses decisions are made with our money but without our input.

Economic understanding allows us to recognize, and sometimes question, the link between public or corporate spending and our wallets.  Too often we take these things, especially the benefits, for granted and expect them to continue and grow without having to personally worry about the cost or where the money comes from, but ultimately we are all contributing.

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