Economic electric chair

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Posted on Apr 20 2001
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This is such an eye-popping number, I hope somebody out there can confirm it for us. As written in yesterday’s Tribune, the CUC is reportedly eyeing jacking up electric rates for some users (Rota, notably) to the astronomically high price of 46.85 cents per kilowatt hour (abbreviated kWh if you care to abbreviate such things).

To which I say: No way. That can’t really happen. Not even in the CNMI can that happen.

There is no place on the face of this earth that I have ever heard of that charges that much for electricity.

Coincidentally, today I was eyeing electricity rates in the southern U.S., where my brother and I are looking to purchase some land so he can hunt on it, and I can vacation there, drink beer, swat mosquitos, and pull ticks off my dog’s butt (the Stephens brothers sure know how to party, eh?). Don’t ask me why I would investigate electricity rates where I’ll probably not be using any of it. Habit, I guess. I used to be an energy analyst, and I’m simply used to researching such things. I sort of use energy prices as a minor benchmark for how efficient an economy is.

Anyway, those southern boys have a convoluted way of pricing out the juice, but I derived a price of about 7.5 to 8.2 cents per kWh for those magic electrons. And that ain’t cheap, by the way.

So there’s your benchmark. Okay, we’re off the beaten path here in the CNMI, so maybe we could justify, based on an intuitive stab, about 12 cents a kWh here in the islands. Actually, that’s a pretty liberal stretch, but I’m a liberal kind of guy.

So there’s your quantitative context. Twelve cents per kWh based on reasonably well-educated intuition, versus a reported 46.85 cents based on yesterday’s article.

I can’t imagine any business that wouldn’t shut its doors at the sound of that, based on two factors. One, of course, would be the raw cost of the juice itself. The other would be that such horridly obscene rates betray some underlying issues that no respectable businesses man, nor citizen, would want to confront in the dark.

As far as residential rates go, the reported target for Rota’s fair citizens was about 32 cents per kWh. That’s still unimaginably high. I don’t know what the average home consumes every month there, but, given the need for aircon in these parts, I’d say that 800 kWh per month would be a reasonable figure for a small home. So, we’d be looking at a monthly bill of $256. At 1,200 kWh, which wouldn’t be hard to imagine at all if you keep that cooooool air blowing, you’d be looking at a coooool $384 a month.

Hopefully, the reported figures are a victim of printing press hacking by a rogue gang of Martian jokers. Or maybe they got quoted in yen or something. But there is no way, absolutely no way at all, that such reported rates could survive in the real economic world. Businesses would close immediately, and home owners would be looking to enforce some accountability at boot-point.

Rest assured, we should follow this one closely.

Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. “Ed4Saipan@yahoo.com”

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