Electric Rates
Dear Editor: When a government appointed task force begins any first draft proposal with a title that is 100 percent spin and hype, it begs for closer scrutiny. It doesn’t take long to discover that this plan is not grand and it is not a bargain. It’s smoke, mirrors and alchemy. The title is a marketing ploy and has the same substance as Hostess Twinkies advertised as being fresh and nutritious.
The people of Sitka are expected to believe that if they vote for a 2 mill increase in the Sitka City and Borough property tax, they will be granted a subsidy to help pay for higher electrical utility rates needed to pay off the bonds on the new albatross hydroelectric dam. In fact, it is neither a grant nor a subsidy. It does not reduce your electrical rate, but it does obfuscate the real impact of the 30 percent rate increase. That is, five percent of the increase in rates will show up in your monthly bill. The other 25 percent will be hidden behind the smoke screen of the increased property tax and the so-called subsidy. It feels better already doesn’t it?
The math is simple. The individual consumer of electricity in Sitka is better off paying the full 30 percent increase in electrical rates rather than being taxed and having the City of Sitka act as an intermediary administering our utility payments through this new “subsidy” to the electrical fund. That is, if I pay $1 for electricity, 100 percent of that dollar goes to paying my electric bill. But, for every tax dollar that goes through this fund to “subsidize” my electric bill, a portion of that dollar is lost to another layer of governmental administration. Thus, less than one dollar goes to pay my electric bill with the “subsidy” ($1 minus handling fees). It’s like a Fun House mirror room, fat looks skinny and skinny looks fat. Government loves it though, because the SCB gets its hands on more of our money and government grows when we need to be trimming government. Don’t forget that if you don’t pay your utility bill, the SCB cuts off your electricity, but if you don’t pay your property taxes, the SCB confiscates your home.
Furthermore, if I reduce my consumption of electricity, or avail myself of new emerging electrical generating technologies, or conserve through the purchase of LED lighting, insulation in walls and windows, or use auto switch lighting, I save on my electric bill. If the SCB raises my property taxes and “subsidizes” my electric bill, I do not benefit from my adaptive conservation activities.
Of course, you may have already figured out that the SCB does not reward conservation. If we use less, the SCB just raises the rates to pay off the Blue Lake Dam Extension bonds. Worse, the SCB electrical rate schedule charges residents on a sliding scale that raises rates per Kwh as consumption increases, but businesses and other entities are charged less and less as their consumption increases. The incentive for residential users is to conserve, but there is no incentive for other preferential users to consume less. Business and these other entities are the real beneficiaries of the subsidy provided by residential users. Furthermore, the “Grand Bargain Subsidy” is inequitable inasmuch as low consumers benefit less than high consumers (i.e., 25 percent of X is less than 25 percent of 3X.)
So, establishing the City of Sitka as an intermediary when we pay our utility bill is inefficient from the consumers’ viewpoint, is inequitable, eliminates any benefits of consumer energy conservation, and risks property confiscation due to non-payment of taxes, and the SCB can back out on this commitment any time they felt like it. It is worse than “voodoo economics.” It is “Alchemy Economics.” Only, rather than transforming lead into gold, the authors of the “Grand Bargain” expect Sitkans to believe that the government can tax us and then magically transform our tax dollars into “granting us a subsidy.” It’s our money whether it is paid to the utility department or the tax assessors office, but it goes further without the SCB getting their hands on it.
Sitkans need to realize that this so-called “subsidy” is really a tax that is being paid by all of us and then earmarked for the electrical fund. Don’t be fooled, if we own property, or rent, or own a business, own a boat, etc., we still all pay the property tax because it is either paid directly, or indirectly when it is added on to the cost of doing business and is ultimately passed on to the consumer.
This “subsidy” does not reduce our electric bill. It’s nothing more than a shell game that obfuscates the rise in electrical prices by being “out-of-sight out-of-mind.” Electricity consumers read their electrical bill every month, but rarely, if ever, read the City of Sitka’s budget reports. We need to be reminded each month of the intransigent problem we face funding our hydro-electric debt. This hydro-electric bond debt is the result of a serious mistake in judgment which, unfortunately, Sitkans may very well be unable to pay. In any event, the Sitka Blue Lake dam extension is an albatross hanging around our necks. The property-tax-funded utility “subsidy” only makes it worse.
Dr. Ronald E. Dick, Sitka
