A Word of Caution When Reacting to Targeted Legislation

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Here’s a hypothetical:  State legislators create an unaccountable bureaucratic board and, over time, invest it with power to make increasingly minute and economically significant decisions affecting private businesses.  After an extended and costly ordeal, one such business resolves to address an abuse that its leaders see as affecting not only its own bottom line, but the future of its entire industry.

Lobbyists and political donations are almost universally despised, but they are the the way the system works, and the business utilizes them.  Legislation it proposes to rein in the power of an insider-tied public utility and the unaccountable board make it nearly to the point of passage by being placed in the House’s revision of the budget.

How should free-market, small-government conservatives react to this sequence of events?  Apparently, if the business in question is a renewable energy company, it’s a story of cronyism on the part of the business.  I’d suggest that conservatives should temper the broad indictments of the system they’re making about the story of Wind Energy Development and House Finance’s Article 18.

Yes, there’s clearly an immediate benefit to Wind Energy if this article passes, but here’s the first provision of the relevant section of the budget article:

The electric distribution company may only charge an interconnecting renewable energy customer for any system modifications to its electric power system specifically necessary for and directly related to its interconnection. Any system modifications benefiting other customers shall be included in rates as determined by the public utilities commission.

I have to admit: that sounds reasonable to me.  Switch the details around a little.  Imagine a manufacturer wants to set up a new energy-intensive factory in the wilds of Southwestern Rhode Island, and the current practice of National Grid and the Public Utilities Commission (PUC) would be to force that company to pay 100% for upgrades to any part of the power grid that its increased usage might affect, even if a particular bit of the infrastructure were on track for a scheduled upgrade the following year, anyway.

Would we characterize it as cronyism if the company took its case to the General Assembly through the usual means, asking only to pay for modifications “specifically necessary for and directly related to” its business?

There is, of course, a bit of justice to the PUC’s ruling.  National Grid should be making upgrades anyway (with the urging of the PUC), perhaps with money that it currently funnels to insider green-energy deals.  That would create a healthier business and residential environment for all of us.  One could see the Wind Energy ruling as a sly way of redirecting some of that cronyism to the public good.

But let’s be careful about our generalized proclamations.  When a near-government entity like an electric company conspires with an unaccountable bureaucracy to tilt deals away from private companies, the recourse should be to the legislature.  Maybe we don’t like the players in a particular case, but we shouldn’t attack broad principles for a particular contingency.



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