I’m a fan of the Georgia Public Policy Foundation, but I’m disappointed after reading their assessment of SB 31.
They claim that the real risk is a downgrading of Georgia Power’s credit rating. However, experts that have testified before the Public Service Commission, the PSC staff bill analysis and the Fitch Group say or show that a downgrading of Georgia Power’s credit rating is unlikely and not necessarily a “worst case scenario” as supporters of CWIP claim.
The PSC staff also notes, “If and when [pre-payment] is shown to be necessary, the Commission can provide for it at that time.” So, why the need for SB 31 if the PSC already has the authority to allow pre-payment if Georgia Power winds up having its credit rating lowered (again, an unlikely scenario)?
The facts prove that this bill is bad for consumers. Myself, Erick and others against the proposal support nuclear energy, but the Public Service Commission exists for a reason and that includes making though decisions on controversial issues, as anti-America as that may sound.
I respect the GPPF, but they are off base in their assessment of the issue.
{ 1 trackback }
{ 73 comments }
← Previous Comments
Re:
“Bill, you absolutely driven home the issue. Nicely done.”
Bill
Do you feel a little “yucky” after that virtual “slap on the back” because I know I do. I’ll give Taft a pass on his kudos because it contained some substance.
No, I really appreciate it from Jason. Thank you, Jason.
What’s this, a mutual admiration society? This sux. What about us mere peasants out here.
Bill, you may be a finance expert, but your logic needs some work. You are arguing that the GPPF will become irrelevant in the world of conservative think-tanks because of this postion on one hand and then you say this isn’t a “conservative” issue. That doesn’t compute. Furthermore, you admit (correctly) that Georgia Power is “a business that is guaranteed a minimum and maximum return on investment”, which means there is no real reason for them to manage costs no matter which way this goes. Even if it turns out this thing cost 10 times what they’re estimating, I’d rather pay $13.00/month now than to let that $150 /year compound for several years and then have to pay it all back later.
Donnie,
The one key difference is this: If it was THEIR money that HAD to be carrying the interest costs and construction costs, they would not be be wishing to tarry too often in the projected 6-year timetable. Because if are unable to begin to “recover costs” until they actually finish and have the plant certified by the NRC, they will be more focused on finishing their construction work on time so that they can then recover their costs.
Your “$150″ amortized over 30 years is a nothing number. BUT, if Georgia Power is playing with the “house money” (a term that describes funds that are not your own), they have no incentive to finish on time or on budget…and, as the budget increases, so will the interest increase because of higher financing costs.
AND…GPPF should have just kept their mouth shut on this issue as it is NOT a “conservative” issue, but a complete non-conservative end-around on the authority of the PSC.
By even offering his misinformed opinion, Kelly McCutchen has demonstrated a clear lack of understanding of the separation of powers in this state…and is encouraging MORE overstepping of boundaries by other branches of government.
Conservatives (other than me) bitch and moan a lot about about the judicial branch of government “making law” rather than interpreting laws. Well, this is a case of the legislative branch engaging in the process of interpreting law wayyyyyyyyy above their pay grade and abilities.
The PSC is the only entity that should be considering or examining any element of this issue. If they decide in favor of Georgia Power, then at least the decision was reached by using the proper legal avenues and process.
Oops. Sorry to miss closing the BOLD tag.
“I’d rather pay $13.00/month now than to let that $150 /year compound for several years and then have to pay it all back later.”
First of all, I’m having trouble keeping up. Are you “Pro Nuke”, “Freeze To Death”, or one of the other 30-70 (lost count) lobbyists that have been hired to grace us with your presence for your “earned media” campaign?
Now, to your often obfuscated point: I have an opportunity cost of my funds, whether $13 a month now, or $13 a month plus compounded interest later. You are trying to tell me and the other rate payers that we’re better off if we pay this today.
Here’s the problem:
I am not a debt free consumer. I’m going to bet that over 95% of GA Power’s consumers are also not debt free.
So, if I have an “extra” $13 a month, (we have to assume this money is extra, don’t we, since you keep throwing the number around like it’s just a rounding error. Funny that GA Power feels the need to have so many people twisting arms for such a small dollar amount, by their logic…)…Anyway, we have this extra $13/month, and you are assuming there is no cost for it. But because I’m not debt free, we have to understand that my opportunity cost is the HIGHEST amount of interest I am currently paying on any borrowed money. Let’s just assume that for most GA consumers, that’s 18%. So, by paying you that money, the average GA consumer is going to have to pay credit card rates of 18% on this money that could otherwise pay down their personal debt.
GA Power, on the other hand, can borrow money from the bond market at very attractive rates. Haven’t dipped into that pool lately, but let’s just say it’s at 6% (and I think I’m guessing high). Now let’s all understand that as a business, GA Power can deduct this money as a business expense from their income, and for our exercise, let’s assume that they pay 33% in taxes. Thus, the effective rate is 4%.
Now, that 18% I’m paying on my credit cards isn’t tax deductible, so I’m stuck paying that if we approve this plan to let GA Power take that extra from me now, for a plant that may never come on line. But if GA Power finances the plant, the effective rate that they will capitalize interest to me is at 4%.
So the question to me as a consumer is, Am I better off if I pay 18% interest on something now that I may never get, (SB 31 solution), or if I let GA Power pay interest at an effective rate of 4% and capitalize that, and let them charge me the compounded rate if and when they get this plan on line (the proposal in front of the PSC).
Your “no brainer” continues to tell me that GA Power and the GA General Assembly assumes that the voters/consumers have no brains.
Icarus…you are SO awesome and super-duper! Introducing the “opportunity cost” concept into this is just purrrfect.
Now, I doubt Donnie here will understand that since his job, as A#1 Lobbyist for Ga Power, is to completely obfuscate the issue…and, quite honestly, I doubt that he has ever been introduced to the concept of “opportunity cost” and what it means.
(I wonder…are we talking to a direct-hire of Ga Power here, or one the Georgia Link boys?)
Evening Bill.
I am super, thanks for asking.
We shouldn’t give Donnie such a hard time. I’m sure he just dashed in from his afternoon beer pong game on the front lawn, and decided to check the computer in between showering and covering himself in Axe body spray before hitting the town with his other frat brothers tonight.
You would think that instead of GA Power putting the quantity of frat-boy reject lobbyists on their payroll for this one, they might have just decided on a couple of quality. Or at least, God forbid, one or two that would make a half-assed attempt to understand the audience they were writing for during their grass roots/earned media part of the campaign.
Thank you for bringing this up, Icky and BS. Opportunity cost is a core, defining concept of economic science. The early Austrian economists are generally credited with the discovery of the concept and its early application. In fact, in Mark Thornton’s Richard Cantillon and the Discovery of Opportunity Cost, he shows that Cantillon, the father of economic theory and method, developed and applied the concept of opportunity cost. His “intrinsic value” was not an objective cost approach, but merely an attempt to estimate opportunity cost. This finding exonerates Cantillon from the charge of objective cost theorist and predates the discovery of opportunity cost one hundred and forty years earlier. Had his readers, including Adam Smith, properly understood him, a gigantic cul-de-sac in economic theory — the labor theory of value — could have been avoided.
The “father of modern economics,” said Austrian economist Murray Rothbard, was a “gallicized Irish merchant, banker, and adventurer who wrote the first treatise on economics more than four decades before the publication of the Wealth of Nations.” Cantillon, believed to be born in about 1680, most likely in Ireland, immigrated to Paris, and later on, moved to London, where details of his life are somewhat fuzzy.
In fact, I’m thinking that Austrian Economics should be renamed Irish Economics. Karen De Coster has a great writeup on him here.
Jesus H Christ.
Another threadjack whereby Taft decides that any economic application comes from the people who think New Coke is a conspiracy.
Constitution. Constitution. Constitution.
::downs tequila bottle::
Wow, Icky, sorry to piss on your cornflakes. You introduced a great concept into this discussion, and I made a side comment related to it. Then you go all Konop on me about “threadjacking”. Methinks you ate the worm a lot earlier tonight.
Dang, I didn’t even mention the
FeCENSORED ReCENSORED. Take a chill pill, dude.And you really should apologize to the folks here who take their faith in Christ seriously. Totally uncalled for to take His Name in vain. Totally.
I’ve always wondered where the “H” in that expression comes from. What does it stand for?
Hussein?
Oooooohhh…actually, I heard the “H” used long before the 1990s.
It’s always used as a profanity. The expression implies that the Christ is a surname rather than a title (Christ comes from the Greek christos meaning “anointed”). The most widely accepted explanation is from the divine monogram of Christian symbolism. The symbol, derived from the first three letters of the Greek name of Jesus (Ιησούς), is transliterated IHS, IHC, JHS or JHC. Since the transliteration IHS gave rise to the reverse acronym Iesus Hominum Salvator (Latin for “Jesus savior of men”), it is plausible that JHC similarly led to the profane expression that Icky decided to bestow upon us all.
Hey Icky, what’s next? Making fun of Bill’s last name for being too Jewish? Or do you have some other dose of religious intolerance up your robe?
Say, Taft? Rumor has it that you are Bill Green. Now, if you are, then you should know that that dude that sidled-up to you and BJ the other day toting a rolling cart was me.
You, the one with the fear of “the bankers”, are going to accuse me of religous intolerance? I realize you have a problem of trying to remove specs from others eyes while having a plank in yours, but you’re really getting a bit rich here.
Icky, if you are trying to say that “the bankers” are all Jews — good grief, man, do you also listen to “Flight of the Valkyries” all day, while hand painting small statues of eagles?
I have no “fear of ‘the bankers’”, Icky. I have respect for our Constitution. I also have a lot of Christian AND Jewish friends, and a number of them are rather offended by your comments so far. Rethink them, please.
My apologies to BS and Icarus…you are absolutely right. It is much better for the average American to pay down his 21% credit card debt than the $13/month (grossly exaggerated to allow for hideous cost overruns). I sometimes forget that the average American lives hand to mouth and is up to his eyeballs in debt.
Hay Jason – did you catch the lobbyist accusations. I knew they were coming eventually. I get all nostalgic when I think back to when you had to have half a brain to be on the computer.
I don’t even know what a “beer pong game” is.
Bankers aren’t all Jews. That’s Hollywood. Bankers are all descendants of the Knights Templar and the Rotshchild Dynasty.
I sometimes forget that the average American lives hand to mouth and is up to his eyeballs in debt.
Ill-informed state senators appear to have either “forgotten” OR were never aware of it as they don’t have to worry too much about paying for meals by themselves.
← Previous Comments
Comments on this entry are closed.