To: Lou L
Why would a utility company offer a rebate on a electrical device? Because it saves them from having to supply as much current? Why would a utility company want to reduce an amount of something its selling?
Its a perfectly sensible business reason - Residential consumers of electricity are low-margin, service-intensive customers (lots of wires for delivering less than 10000 KWH per year, lots of service calls, pay lower residential rates, etc.). Commercial users of electricity are high-margin, low service customers (fewer hookups, high usage, higher rate, etc.)
Since it costs umpty-beaucoup bucks to build a new power plant (and higher power line capacity), both from simple capital expense and regulatory hurdles, it makes sense to encourage your low-margin customers to consume less of your product, slowing the growth of demand, and thereby allowing you to spread the cost of new output over a greater period of time.
This is especially effective with subsidies of CFLs - If the utility is sensible, it takes time to select a quality lamp for its subsidy. The subsidy of 25 cents to a dollar per lamp reduces energy consumption 75% or more over the 5-10 year life of the lamp. This can have a substantial cumulative effect on demand.
You have some good points, but I think your examples are over-stated in terms of costs. Guess I’d have to see the figures. In any case, I’m always suspicious of business models that depend on rebates for business.
posted on 04/22/2012 11:09:42 AM PDT
by Lou L
(The Senate without a filibuster is just a 100-member version of the House.)
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