A Mighty Wind - more on the buyback story

In today's T&G, George Barnes drills down into the current status of the Green Energy Communities Act and the ongoing situation with how much utilities might end up paying to buy back power from Holy Name High School, among others.

It appears that where he writes, "With the school only receiving wholesale, rather than retail rates..." he's substantiating my earlier assumptions about what that wholesale rate might currently be. Since he also reiterates the buyback rate at 3.5 cents per KWH, I have to assume that's what the wholesale rate is for National Grid.

With a 414% markup, that's a hefty margin for the company selling electricity to Holy Name High School at 14.5 cents per KWH. The caveat, of course, is how much their operating costs bite into that. They may not be making the kind of "obscene profit" that the markup might indicate... but I'll get back to that in a minute.

Meanwhile, the Green Energy Communities Act, according the article, will exempt publicly run municipal power companies from any requirement imposed on regional, for-profit power companies in Massachusetts regarding any buyback rate changes. This means that Shrewsbury, for instance, which owns their power company, will continue to be able to buy back any locally generated power at whatever wholesale rate it currently pays... although even that isn't clearly explained with any hard numbers.

The apparent markup margin between cost and revenue that I mentioned in my earlier post (link above), though, worked out to a roughly 12% markup for Shrewsbury's publicly run power company. But since I don't have any source for the hard number, the actual wholesale rate they pay, nor the actual retail rate they charge, we have another caveat there, as well.

These missing data on hard numbers apparently prompted the first two commenters to George's article to condemn ALL the publicly run municipal power companies! I hadn't come away from George's article thinking that, for instance, the Shrewsbury public electric company was the "bad guy", but it's clear that those commenters did!

Well, they only got that idea because of the missing data, ie- how much does Shrewsbury, for instance, have to pay the for-profit power companies for their wholesale rate? I'd be very surprised if Shrewsbury pays only 3.5 cents per KWH for their wholesale rate. I'd actually be more likely to assume that they're paying 12.75 cents per KWH, since that's what it would work out to with a 12% markup to make their retail price, essentially, the same as everywhere else, ie- around 14.5 cents per KWH. But that's just an assumption.

What are the real numbers?

Well, if the Shrewsbury town power company paid only 3.5 cents per KWH and only marked that up 12% for retail, then everybody in the state would want to live in Shrewsbury! With power that cheap, relative to everywhere else, that town would be bursting at the seams!

So, I really do think it's safe to assume that's not the case. I really do think it's safe to assume that not only is Holy Name High School getting a raw deal on the buyback rate, but Shrewsbury (and every other town with a municipally run power company) is also getting a raw deal on their wholesale rate.

Of course, it's just an assumption due to the missing data. As usual, any conclusions one might draw from any T&G article will merely be assumptions, depending on the spin. And the spin has obviously prompted the first two commenters to assume that the publicly run municipal power companies are the "bad guys" in this story!

With an ostensible mission to "inform the public", the T&G almost always fails to provide crucial data. And I'm pretty sure that they're also missing a much more "newsworthy" story that could be reported to "inform the public" as regards this electric power situation, here in Massachusetts.

That story might be that the Shrewsbury power company operation is also doing a 414% markup, but that they're fudging the annual report to make it look like the markup is only 12%. Or the story might be the incredible success of a purely socialist operation, a town-run power company that manages to operate with such a tiny (12%) markup, compared to the profit-making regional power companies.

Or, the more likely story could be the incredible depth of corruption on Bacon Hill that has allowed obscene profit-taking from the public for all these years, in the providing of electricity, an absolutely universal need to simply live, like water, sewage, and other municipal services that don't have to bear the burden of profit... just so that some tiny few can live high off the hog selling a "product" that has no competition, and that everybody absolutely has to have.

I am most definitely not against people creating businesses that become successful, and who become fabulously wealthy because they invented something that everybody wants. This is a great thing. But the greedy exploitation and gouging of an entire, 100% captive population... that's where I have to draw the line.