Good grief, have you followed that story? The idea has been floated that a power barge might be the way for Saipan to address some of its power woes. Never mind the details; the Commonwealth Utilities Corp. situation is a longstanding story.<\/p>\n
So let\u2019s flog some big picture stuff. Theoretical economic stuff. I used to be an analyst for a wind energy company and I\u2019ve worked on some well-known projects, so I love to pontificate and flap my jaw about this stuff. Oh, lucky me\u2014no, lucky you!<\/p>\n
There is a theory that goes like so: A benign monopoly in a utility can be more efficient than a \u201ccompetitive\u201d situation, since having a monopoly reduces the amount of redundant costs shouldered by competitors. NO, don\u2019t run away yet, I\u2019ll try to explain this better….try this: it\u2019s cheaper to build one network of power-lines (a \u201cgrid\u201d) than to build two, right? And it would be really zany if, say, five competing companies built five competing grids.<\/p>\n
So far, so good, yet if we want to argue for a monopoly, another issue is: Just who gets to operate the monopoly? This is a major question all over the world. All the choices are bad. A private company would have obvious incentive to gouge everyone (hello, Enron). A government entity, on the other hand, will be inefficient and corrupt. A compromise solution is to have a government agency regulate a private utility, but this now compounds the original problem by adding a layer of big, fat, regulatory bureaucracy that doesn\u2019t produce any power at all. Well, pick your poison.<\/p>\n
Government monopolies can, indeed, be the best option. Forget electrons, for a second, and consider roads. Life would grind to a standstill if roads were privatized and every corporate Shylock could take a pound of flesh from your wallet every time you had to drive somewhere. In fact, you couldn\u2019t even have roads to begin with if you didn\u2019t have a government to build them. A private company would simply lack the muscle to decree rights of way. Nobody could negotiate with 10,000 property owners to build a road, the economics of it simply won\u2019t work, and this is a situation commonly proved in economic texts on public finance. There is, then, ample proof, both theoretical and empirical, that government ownership and control of roads makes a lot more sense than private ownership and control of roads. You can apply a lot of this same logic to utilities.<\/p>\n
And back on the utility side of things…the CNMI is in trouble. The CUC won\u2019t improve much. On the other hand, \u201cprivatizing\u201d CUC may result in consumers getting raked over the coals by a greedy monopoly, and all monopolies are greedy. And, on the other, other hand, having a private monopolist generate electricity under the regulatory oversight of a government agency would just mean that the Commonwealth Utilities Corp. becomes the Commonwealth Utilities Commission (or some such thing), and you\u2019d have the worst of all worlds.<\/p>\n
I\u2019ll mention that you could have several competing power generating companies while having a separate entity that owns the grid, a situation that I\u2019ve been involved with in the U.S. Maybe we\u2019ll dig into that topic some day. Maybe not.<\/p>\n
Power plants are hugely expensive projects that your children, and their children, will have to pay for, and the whole concept behind that gig is to intelligently spread the costs over a lot of years, the better to serve everyone\u2019s interests. This merely compounds Saipan\u2019s bad situation, since our procurement process is…shall I say \u201cidiosyncratic.\u201d Sorry for the five-dollar word, but all the fifty cent ones are lacking in diplomatic nuance. But I\u2019ll say this: A power plant is so expensive that if Saipan botches the procurement of one, it could sink the entire economy. I mean it. This is one issue that you\u2019d better get really, really sensitive about.<\/p>\n
But what about wind or solar power? Stay tuned, I\u2019ll flap my jaws on that in an upcoming column. See? Lucky you.<\/p>\n
(Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. Ed4Saipan@yahoo.com)<\/p>\n","protected":false},"excerpt":{"rendered":"
Good grief, have you followed that story? The idea has been floated that a power barge might be the way for Saipan to address some of its power woes. Never mind the details; the Commonwealth Utilities Corp. situation is a longstanding story.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-81954","post","type-post","status-publish","format-standard","hentry","category-local-news"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/81954","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=81954"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/81954\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=81954"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=81954"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=81954"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}