Taking Responsibility: Matt Drew for City Council

I just got back from an excellent Emerging Tar Heel Leaders meeting.  It was a great discussion with a range of highly experienced panelists who are involved in water and power issues on a daily basis.  Not surprisingly, there was pretty much a consensus that water and power rates are going to go up.  Given the state mandate on renewable energy sources, Progress Energy and other NC power companies are going to be paying more for renewable energy sources, and the supply/demand dynamics are going to drive up water prices.  I was able to ask the Progress Energy representative why they haven’t raised rates to this point, and he was blunt:  they haven’t raised rates because it’s illegal.

Think hard about that for a minute.  Then consider that the historical evidence is pretty strong: where you have price controls, especially unrealistically low price controls, you have shortages.  Do we really want shortages of electricity and water in the name of keeping prices unrealistically low?

Another point that was driven home by the panelists is the unbreakable link between water and power.  Of all the water taken out of North Carolina water supplies, do you know what percentage is taken by power companies?  Eighty percent.  It’s used for cooling in both nuclear plants and coal plants.  Of course, most of it goes back into the water supply after being heated, but power is entirely dependent on water.  No water, no power, either.

Tiered water rates is not going to fix that problem, because they don’t respond to decreases in supply and they don’t keep the income stream steady so that we keep our debts paid.  The only reliable way to deal with this problem is to have a variable price – when supply is high, the price is low.  When supply is low, the price is high.  This encourages conservation, and everyone pays for what they use.  Do I want higher water prices?  Of course not.  But I don’t want to run out, either.  One of these scenarios is a hardship.  The other is a catastrophe.