Defining Terms
Steve Mitnick has authored five books on the economics, history, and people of the utilities industries. While in the consulting practice leadership of McKinsey & Co. and Marsh & McLennan, he advised utility leaders. He led a transmission development company and was a New York Governor’s chief energy advisor. Mitnick was an expert witness appearing before utility regulatory commissions of six states, D.C., FERC, and in Canada, and taught microeconomics, macroeconomics, and statistics at Georgetown University.
What do we mean when we say that something is unaffordable? I ask for a very good reason.
It is commonly said that a proposal to raise electric rates would make rates unaffordable. And it is commonly said too that rates are bound to become more unaffordable considering plans in the works to pursue the energy transformation.
These things are said, typically, without specifying the red line that demarcates unaffordable electric rates from affordable rates. In the absence of such a definition, how then can we know when a proposal or plan would make rates unaffordable or would not?
Are electric rates unaffordable in some parts of the country and affordable elsewhere? Were rates affordable at times in the past and unaffordable at the other times?
This reminds me of the famous Supreme Court decision in 1964, Jacobellis v. Ohio. The one in which Justice Potter Stewart wrote, “I know it when I see it.” Must the affordability of electric rates be as subjective and ill-defined?