Utility Electricity is Like Credit Card Debt

There has been a lot of buzz recently about how non-utility solar energy hurts the poor. Of course, this is all nonsense from the nation’s monopoly utility companies who want to monopolize the sun as an energy source, too. Utility companies want you to buy solar energy – as long it is from them!

Solar panels reduce utility electric payments, which are like credit card interest.
Solar panels reduce utility electric payments, which are like credit card interest.

If you think about it, buying electricity is like paying interest on credit card debt. We all want essentially unlimited electricity, but we can’t afford to buy our own nuclear/coal/natural gas power plant, so we put it on a “credit card.” Then we start the slow and agonizing process of paying down that debt with monthly payments to the utility company who borrowed the money for the power plant from big banks. We as electricity consumers can’t control the cost of the interest, which is variable. Sure, interest rates are pretty low now by historical standards, but we better pay down the principal before interest rates start to go back up.

If you haven’t made the connection yet, interest on a credit card debt is much like the fuel portion of your electric bill. We have historically low natural gas prices now (natural gas dominates Florida’s energy mix), but there is no guarantee that it will remain at current levels, and it is a finite resource. In fact, fuel price risk is even worse than credit card interest, because there is really no upper bound on where prices could go, and we can’t predict or lock in the rate.

Solar electric systems require a lot of money up front, and then provide essentially free electricity for along period of time – decades. Our utility companies are more than happy to install solar energy at your expense, as long as we put it on our “credit cards” and remain shackled to the interest payments.

“Utility electricity is like credit card debt”

The better way, of course, is to pay cash, up front, and own the power plants ourselves. The utility companies can pay us (who doesn’t love airline miles and 1% cash back?) Unfortunately, many people don’t have the kind of cash required to install a sizable enough system to make a dent in their monthly electric bills. After all, if that were the case, credit card debt would not be a massive issue in this country. Individuals and business who can afford to buy solar energy are the same people who can pay cash for their vacations, Christmas gifts, and a night out on the town. Some use lower cost financing like home equity loans or other secured loans. That does not harm the poor – it harms the utility company (the credit card issuer).

Who is really hurting the poor. Is it the neighbor who puts solar panels on her house at her own cost, or the utility company that charges exorbitant interest with no guarantee of future rates?

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