31 August 2012

Charge the poor to subsidize the rich

Last December I criticized a proposal to implement "postage stamp pricing" across ALL areas served by investor-owned water utilities in California. One big reason: people in one area would have to pay for service or investments in another area.

Well, truth is stranger than fiction. A proposed decision for water rates on Catalina Island (water utility owned by So Cal Edison) allocates $19M of additional costs to 4.8 million mainland electricity customers, i.e., people who will not see even a little tiny bit of additional value for that money. Read the discussion [pdf] from p 51.

Bottom Line: Rich people on islands should pay for the water that comes from the taps or into their pools. In fact, people EVERYWHERE should pay for their water. Subsidies invite waste and corruption.

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