Why should taxpayers subsidize utilities’ profits?

    Doesn’t it seem strange to read articles about utility companies’ increasing net profits? With the recent news about a proposed crackdown on the hedge fund operators and oil future speculators, you’d think that all energy and fuel type providers would feel the "heat."

    Commentary on the current pump prices has recently hovered around the supply and demand effects on the oil futures prices being driven up by an increasing demand by speculators to have large investment returns.

    In short, more people investing drives up the price. It’s a self-fulfilling nightmare for consumers. As new investors invest, having seen the success of current investors, the price drives up, enticing more investors, driving the price up further.

    And round and round we go. There’s a precedent for this. Remember the dot-com bubble from the late 90s? How about the housing bubble? And the other housing bubble? If only the oil bubble would pop.
    But this makes me think of other energy companies, specifically We Energies and Alliant Energy. I read on BizTimes.com last week about We Energies’ increasing quarterly net income and another article about Alliant’s performance. My thought is, why should their net income of $57.7 million (6.5 percent of their quarterly revenue) be increasing? Why should shareholders make 49 cents per share (for the quarter) at the cost of consumers trying to keep their homes lit, and their stoves hot?

    Private utility companies, energy speculators and shareholders all expect a return on investment. Meanwhile, you and I pay higher prices for energy to provide them this return. I know I’d like a 6.5-percent decrease in my energy costs. We Energies provides basic needs, and they have a monopoly.

    There should be a crackdown on the utility companies that seek to abuse their customers to line the pockets of their CEOs and investors. What’s more, it’s not only through your monthly bill that you pay for these investment gains. With more money being paid out by social services to help less fortunate families with outrageous winter energy bills, you’re also paying for We Energies’ net profits through taxes, a heavily bureaucratic system and an extremely inefficient cash transfer method.

    It would be more efficient for the government to give the money directly to We Energies, but the government doesn’t want to look like a "bad guy" by subsidizing the net profits of a monopoly.
    Instead, they look magnanimous by helping the poverty stricken. Would it be reasonable to expect another competitor to enter the market? No. The barriers to entry are too high.

    Considering that their services are absolutely necessary, would it be rational to expect that We Energies (a monopoly) provide a service that is affordable? You bet. Sure, We Energies isn’t a charity, and I understand the need for capital improvements, expansion, and research and development.

    In the end, We Energies should be making advancements in technology that can provide cheaper, cleaner, and safer energy. I realize nuclear is a bad word, but the reality is that it’s safe, it’s clean, and there are processes in place to manage waste effectively.

    Instead, We Energies cashes our checks and continues to provide us energy from coal-fired power plants, dumping tons of greenhouse gasses into the atmosphere (which are then absorbed into our water supply). Whether or not you believe in global warming, global climate change, or whatever euphemism is being used on the nightly news these days, the reality is that such quantities of soot being pumped into the air isn’t good for anyone.

    With the second-largest snowfall of record this past year, and an economy full of stories of lost jobs and foreclosed homes, you’d think that We Energies wouldn’t be so boastful of their performance to their stockholders.

    Shame on you, We Energies.

     

    Gene Anjovik of Wauwatosa is self-employed.

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