Of TREEs and inverted rates

If you were a tree, what kind of tree would you be? A willow? A boabab? A one-man environmental advocacy group?

In the Free Press story earlier this week Lower electric bill for poor urged, something seemed odd: why would environmental groups lobby the Public Utilities Board for lower rates for anyone? Lower rates encourage greater power usage, which is bad for the environment. So .. I decided to take a peek: Who are these groups? How can non-profit organizations afford to hire fancy American lawyers?

The first group -- Time to Respect Earth's Ecosystems (TREE) -- is very small. How small are they? They are soooo small that their head office is a nest. Haha. Oh, I kill me... Would you believe I just came up with that? Actually, this is their head office:

It turns out that TREE is actually just a guy: Peter Miller, Professor of Philosophy, University of Winnipeg. He doesn't even have a web site, but he does have a mission: "Advocacy for a sustainable forest agenda in Manitoba."

So he's a philosopher who is for sustainable forests, but he wants to help poor people. Okay. What about the other group?

Green Action Centre, formerly Resource Conservation Manitoba, is a much larger group. Or, I should say, they are a group. They have a web site with all kinds of information about their causes and activities, which include active transportation, recycling, reducing emissions, composting ... the list goes on, but oddly the list does not include anything about lower hydro rates for poor people. It's not on their blog, or their "events and actions" page, or anywhere else that I could find.

Why is this group hiring lawyers to lobby the government about a policy that's not even on their agenda? Well ... probably because the aforementioned Professor Peter Miller in on their board of directors. What appears to be happening here is that Prof Peter is leveraging the name of a well-known group to lend legitimacy to his personal quest.

On to the second question: how can they (he) afford to retain and pay these consultants and lawyers? Answer: he can't and he doesn't. Who does? You do. Indirectly.

It turns out that this thing about petitioning the Public Utilities Board isn't a one off. In fact, it's pretty much an annual event, and each time Peter Miller applies for and receives a full reimbursement of his costs:

Accordingly, the Board (Public Utilities Board) will award cost in full ... Costs shall be payable by Manitoba Hydro within 30 days of the date of this Order.

He did this in here, here, here, and here in 2008 when he was awarded an eye-popping $142,066 for lawyers and consultants from Arlington, MA, even though according to Hydro the value of their input was very questionable:

The evidence provided by Mr. Weiss to the GRA proceeding was not relevant ... Further, the evidence was duplicative, since it was virtually the same evidence provided by Mr. Weiss, through RCM/TREE, in the 2007 Centra Gas General Rate Application.”

142 Grand for redundant information. Nice. Now, in relation to something like, oh .. I don't know .. bipole III, $142k is peanuts. Nevertheless this is a very expense hobby that Peter Prof has -- it has cost over $300,000 in the last five years alone ... but it hasn't cost him a cent.

So that's who they are and how they get their money. Now ... why? Why is a guy/group whose mission is to protect forests intervening in a PUB hearing to reduce Hydro payments for low income people? This is somebody who once said that supplying power below cost was a "crazy policy", and that "if no one is feeling the pinch from energy prices, why bother?" (source)

It's a tough question to answer. It's not immediately apparent why he's doing this, though I suppose I could phone him and ask him if I really wanted to. I think he's just bored. You may have guessed from my subtly sarcastic remarks two posts ago that I think a two tiered rate structure is a dumb idea. I don't doubt that Peter Prof would agree that it's a dumb idea. He's just run out of good ideas to lobby PUB for.

I actually happen to think that a previous idea of his is a good one ... or at least not a bad one: an inverted rate structure. This is where the first X amount of power is charged at a low rate, and the excess power is charged at a high rate.

If you really want to promote conservation while not bankrupting poor people, this is the way to do it, because as economists like to say: people make decisions on the margin. That is, it's your marginal cost of the next unit that you take into consideration, not the cost of all the units you bought before. Let me illustrate: when you go your friend's social and buy tickets for the 60-pounder of booze, you really only want to buy one ticket because your friend is a cheap skate and his fiancée is a bitch. But you buy three tickets, because the marginal cost of the two extra tickets is half what the cost of the first ticket is. It just seems stupid to buy only one ticket.

Manitoba Hydro actually does have an inverted rate structure ... sort of. There is a slightly higher rate for electricity use in excess of 900 kWh per month. I just checked my past two hydro bills and I use about half that, even though I routinely waste gobs of electricity. I leave my computer on overnight and while I'm at work. I never unplug anything. I have incandescent Christmas lights still, and they're set to turn on at 11 AM. Actually, they're set to come on at dusk, but you get the idea.

A far better idea than having separate low rates for poor people, or capping their payments at 6% of their income, or whatever dude is suggesting, would be for Hydro to lower the rates for a basic minimum level of monthly electricity use -- enough to run your fridge, stove, and lights. Nothing more. Set that at maybe 3 ¢ per kWh. Everything above that should be charged at cost, whatever that is, or maybe a little more. Probably something like 9 or 10 ¢ per kWh. If I'm paying three times as much for my marginal power usage, I may be more inclined to power down my PC at night.

Low income people should save money overall because presumably they don't have 60 inch plasmas sucking up megawatts every evening, so most of their power usage should fall within the lower rate bracket. The catch is that people who heat their homes with electricity will get screwed. Maybe something else can be worked out for them. It should be easier for Hydro to keep track of who has baseboard heat than how much everybody's income is, after all, Hydro is the gas supplier too.