Fixed Charges in Rates: 1938 Classic on Rate Design

Havlik’s timeless analysis: Justification for fixed charges in rates, their just level relative to variable charges.

I found this book at the Library of Congress and had to have it. Fortunately AbeBooks, that has just about anything old and obscure, did have for sale this 1938 classic on rate design. And that's how I came to own a copy of "Service Charges in Gas and Electric Rates" by Dr. Hubert Havlik.

Hardships of a Woman's Life Before Electrification

Punishing tasks, growing old prematurely, dying before their time.

In 1984, the National Rural Electric Cooperative Association published a remarkable history. "The Next Greatest Thing" chronicled the nation's electrification, outside of the cities especially, where most Americans still lived.

The first chapter, Because There Was No Electricity, tells a poignant story of how most lived. A woman's life was particularly hard, as we excerpt here: 

Electricity's Ten Greatest Achievements in the Last 25 Years

Emission reduction, combined-cycle, fracking, regional transmission, smart grid, wind, solar, energy efficiency, cost reduction, nuclear revival.

We're inspired by stories of the nation's electrification in the twentieth century.And the lasting monuments to the toil of our grandfathers and fathers: the Hoover Dam, a hundred nuclear workhorses, a grid spanning the continent. 

Many have thought that this industry's best days are long behind us, in that fading age of miracles.They should look closer at our great achievements, the monuments we've erected in the last twenty-five years.

Take a look at this list, my nominees for electricity's greatest achievements since 1991:

Poetry Opens 1937 Hit Movie on Linemen

“An army of men whose skill and daring have made this great power a reality.”

The 1937 hit movie Slim starred Henry Fonda and Pat O’Brian. It stirred millions of Americans with rivalries among men, and romance with the likes of Margaret Lindsay and Jane Wyman (who later became Ronald Reagan’s first wife).

The men were linemen risking their lives to build and maintain the fast-developing grid. 

Baseball Standings by Utility

Exelon Orioles, Cubs, White Sox, Phillies and Nationals on pace for a 104 win season.

The electricity for five major league baseball teams is delivered by Exelon. The Baltimore Orioles, Chicago Cubs, Chicago White Sox, Philadelphia Phillies and Washington Nationals. 

When all five teams are playing at home, Exelon lights a third of baseball. 

Three other utilities deliver electricity to two teams in the majors. Con Ed delivers to the New York Mets and New York Yankees. Pacific Gas and Electric delivers to the Oakland Athletics and San Francisco Giants. Xcel Energy delivers to the Colorado Rockies and Minnesota Twins. 

Substantial Minimum Charge in Electric Bills

Fixed minimum charge was a much higher percent of electric bills in 1940 Wisconsin.

The fixed minimum charge was a much higher percent of electric bills in 1940 in Wisconsin. This was common throughout the country, from Maine to Mississippi, Massachusetts to Montana.

Over the years, the fixed charge remained, well, mostly fixed with little adjustment for inflation. But the variable charges in electric bills continually rose with inflation and with growing kilowatt-hour consumption. 

La-La Land, Circa 1970

Forgotten survey of 1,000 households in Los Angeles/Orange County.

"... the ownership of luxury items - dishwashers, clothes dryers, air conditioners, etc. - is particularly sensitive to income level." 

Welcome to the Los Angeles/Orange County area in 1970. We found in the Library of Congress this remarkable survey of consumers' adoption of machines, appliance and devices as of 46 years ago. 

Forty-seven percent of households had a color television. Sixty-nine percent had a black and white TV.

Fewer kWh + Price Drop = Lower Electric Bills

Residential customers paid seven percent less for electric service in February 2016.

Residential customers in New York paid 23 percent less for electric service this February than in February 2015, per new Energy Department data released Thursday. In Massachusetts residential customers paid 22 percent less. Same in Connecticut.

Part of the reason was fewer kilowatt-hours taken. In New York, residential customers took 9 percent fewer. In Massachusetts, they took 15 percent fewer. In Connecticut, they took 17 percent fewer.

How Low Can Electric Bills Go? 1.38%

In just 1 year out of last 58 has electricity been more economical.

There have been 58 months of March since March 1959. Of all those months of March, only one had a smaller percent of consumer expenditures spent on electric bills than March 2016.

In March 2016, just 1.38 percent of consumer expenditures paid electric bills. That's what the Commerce Department reported on Friday, in its gross domestic product release.

Only March 2000 had a smaller percent, 1.34 percent. March 2016 and March 2004 tied for second place, with 1.38 percent paying for electricity. 

FRI Public Utility Symposium 2016

The 2016 FRI Symposium  will examine the management challenges of balancing the modern public utility’s need for profitability with the requirement of providing customer service that is safe, reliable, and affordable. Included in this discussion will be issues of physical and cyber security, environmental responsibility, infrastructure enhancement, regulatory design, and the management of investor relations. The Symposium’s panels will examine current practices in these areas, identify emerging new solutions, and offer thoughts regarding developments in the near-term future.