75-07-A4
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Utility Subsidies[edit]
Transcript[edit]The federal government is flirting with a bad idea whose time definitely has not come. I'll be right back. Secretary of the Interior Morton in a recent speech to the Southeastern Electric Exchange advocated a federal government subsidy of the electric power industry. His concern is understandable. In recent years electric utilities have struggled with an array of problems. The upshot is that they're having increasing difficulty in obtaining both financing and state approval for badly needed expansion. The foremost problem has been the four-fold increase in petroleum costs and increases nearly as great in other forms of energy. To make energy, you need energy. The cost of the utilities for that startup energy is now very great. Simultaneously the utilities have had a continuous struggle over rate increases. Basically electric utility rates are regulated by state governments. Some states provide for automatic price escalators depending on increases in costs. Many others however, control utility rates on a case-by-case basis that often results in confusion if not chaos. There's a large dose of political posturing in this arrangement too. It'd be hard to find a state without at least a few politicians who make hay over any proposed rate increase, never mind the fact that our utilities have mounting expenses coupled with mounting obligations and that a reasonable profit is the only way to finance expansion to meet consumer needs. On top of this some environmentalists more concerned about nature than people have gone to excess in opposing many power plant siting cases. This continues even in the face of an added need for expansion during the energy crisis, almost as if such a crisis was imaginary. In recent months however public understanding of the situation has grown, by now most Americans have begun to understand that inflation of energy costs didn't arise here but abroad and that all forms of energy are going to cost more as a result. It seems to me also that more people understand now that there are going to have to be some environmental trade-offs. For example, that home heating is part of our environment too, and that until that day some years down the road with solar or other energy can be used for that purpose, we're going to have to use fossil fuels. Increased public awareness has probably also been stimulated in part by the very wide ownership of utility stocks, particularly among retired persons. The sharp plunge in the price and dividends of utility stocks has hurt many people on fixed incomes who can't really afford it and their families know this. Now comes Secretary Morton with his proposal for guaranteed loans and other government aid. Such a proposal if approved could destroy the trend toward growing public understanding of the plight of the utilities. In time this understanding might result in the utilities making enough return to finance their own expansion. A subsidy in the other hand is simply another hidden tax. You and I pay for it, we just don't see it. One way or another, the public will be paying for more expensive energy. Why should we pay in a way that disguises the real problem which is the need for expansion in the private capital that can make that expansion possible? Secretary Morton spoke eloquently on the dangers involved, quote, "I ask that you be wary of the camel's nose under the tent. What may look like a solution to today's problem may push you out of the tent tomorrow." he told the utility executives. "Unfortunately," he added, "but we must be realistic. you do need help." Unquote. True realism on the part of the utilities dictates that they themselves lead the opposition to this unwarranted and dangerous government subsidy of private industry. This is Ronald Reagan. Thanks for listening. |
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