Resisting the Subsidies on Principle


It always feels awkward to be that guy pointing out that the “good deals” offered by government take from other people, many of whom are poorer than the person getting the deal.  A couple of holidays ago, it was my brother in law and his wife, talking about this great program to replace their light bulbs to save on their energy bills with practically no investment, courtesy of the energy company.

It didn’t go over well when I explained that their savings would drive up rates for everybody, effectively increasing the energy bills of their neighbors.  And, since the people with the time and wherewithal to research these programs will tend to have higher average income than those who lack those resources (who’ll also be less likely to own their homes), the program is little more than a transfer of wealth from the poorer to the wealthier on a large scale.

Robert Bryce made the same point in a recent Wall Street Journal op-ed, in which he (tongue in cheek) thanks taxpayers for subsidizing his money-saving solar panel installation:

… fewer rooftop solar projects are being installed in low-income neighborhoods. That’s true in California, which leads the country in solar-energy capacity. According to a study done for the California Public Utility Commission, residents who have installed solar systems have household incomes 68% higher than the state average. Ashley Brown, executive director of the Harvard Electricity Policy Group, calls the proliferation of rooftop solar systems and the returns they provide to lucky people like me, “a wealth transfer from less affluent ratepayers to more affluent ones.” It is, Mr. Brown says, “Robin Hood in reverse.” …

But don’t trouble me with all that. I’m doing my part for the polar bears. Indeed, I’m a prime example of the “green” economy: I’m socializing the costs of my scheme and privatizing the profits. And I’m feeling virtuous while doing so.

It doesn’t get much better than that.

The other day, a young woman came to the door selling a new solar panel arrangement.  From the quick front-step pitch, it sounds like the company merges the alternative-energy-company model with subsidies for solar installations.  Basically the company becomes a household’s energy provider and leases space on the roof (for decades) to generate power.  In very high-production months, National Grid will send the homeowner a check, but in general, the household will just pay lower bills through this alternative company.

Of course, there are more-traditional ways of doing the solar-panel installation that leave the homeowner owning the system at almost no cost.  Even if the numbers work out, though, I don’t know if I could take advantage of it; Bryce is right: These green schemes are just a way for wealthier people to feel good about taking money from less wealthy people.

  • Guest

    Hawaii is the only state in the nation that has the highest electric rates in nation because all the electric power generating systems were built for imported oil when it was cheap. The state PUC and local electric companies have moved from the old style of centralized power distribution model which was based on fixed profits to distributed power model where everyone provides power or saves power to reduce demand on system and is rewarded for saving electricity by reduced rates.

    I don’t have solar on my roof because payback is too long for electricity I use but I did change from incandescent bulbs to mercury fluorescent bulbs to LED light bulbs (getting mercury out of house plus LED bulbs last 10 times longer and are instant on like old incandescent). My electric bill dropped $10 per month. I renovated my kitchen and installed energy star appliances and my electric bill dropped another $10 per month for a total $20 or $60 down to $40 per month. Electric company ranks me 21st most efficient household out of 100 households within 1 sq. mi. per meter readings mainly because other people are working, not home and I am retired and home during the day. There were rebates for purchases I made for energy efficiency but I didn’t take them because of all the paper work.

    However the electric company just came out with a new pilot program
    with rates set for time of day when solar is at peak production. During day
    when all alternate energy is at full production there will be the lowest ½ rate for usage and at night when they have to fire up all the oil fired generators the rates will be 1 ½ higher. If you are home during the day do your laundry, run the dishwasher and major cooking at ½ rate and then warm foods cooked for dinner in microwave at night.

    As each major renewable energy system has been integrated into the grid saving imported oil usage the electric rates have decreased. The state is the only state in nation that has set a goal to be 100% alternate renewable
    energy for electricity by year 2045. The 5 electric companies say they will
    meet the 100% goal before date with help from new cheaper technologies in the pipeline without using expensive offshore windfarms.

  • Honesty Broker

    So you could only find research that is funded by companies that would benefit from limiting the distribution of power generation?

    Must not have looked too hard…