Yesterday, Delmarva announced that they had selected the winning bids. They said it would save Delawarean’s lots of money….I believe something like $240 a year or $80,000,000 a year for all of Delaware…..They did not provide the public any proof. They said that would be available at some future date (sometime in June: perhaps the 30th at 11:59?)….

After investigating their claims, (which I had sincerely hoped would turn out to be true) I am afraid you will have better luck receiving that money from Delmarva if someone were to win the Powerball and donate the money back to every Delmarva customer……..

Ironically its the same problem that was embedded in the Gas Tax Controversy that propelled Obama closer to being the ultimate nominee.

That problem is how can one be sure that the savings won’t be swallowed up by the energy companies, instead of going to the consumer?

Here is how Delmarva’s plan works locally…….

Here is what Delmarva wants…..they want to buy from bids offered and pass that on to you…..Look, in all honesty, if I were in their shoes….I would certainly want the same thing…..The reason I’m against such a plan, is because I am on the other side…..I am one who pays Delmarva way too much for my electricity! Which side are you on?

Here is how it works. Pretend that I am a utility, semi-controlled by a state regulatory board and I am guaranteed a profit of 4% on the dollar. Mathematically I take my costs, give them to the regulatory board, and they give me permission to charge you 4 cents on every dollar you cost me.

This means that if I sell you a month’s worth of electricity……costing me one dollar…..I get 4 cents…..If it costs me 100 dollars, I get 4 dollars. If I can push it up to 200 dollars, I get 8 dollars. It must then follow, that as circumstances beyond my control, cause my costs to rise exponentially, my profits will do the same as well……all because of the 4% guarantee…This gives me one hell of an incentive to create my own income….As I jack up your price, and you have less and less money to spend on yourselves, I collect more and more to spend on myself…..

Remember, that at 100 dollars, I was perfectly happy. But at 200 dollars, I’m twice as happy. This is different from a normal market situation. Were I facing stiff competition, as my cost rose higher, my margin would stay the same. In other words, as my costs jumped from 100 to 200 dollars, I would tack on my 4 dollars and not worry and be happy….for by being greedy and hanging on to the 8 dollars, someone wiser who was happy with four dollars, would underbid me…….and then I’d have nothing…….

This is why, my Libertarian friends, in a semi regulated environment, our government needs to be there in order to tell a business what to do. Otherwise irreparable damage may be done to a certain state’s economy, simply because their is no check or balance to counteract an extreme act that benefits the perpetrator…..

Now if a new power source enters my kingdom, and just for fun, let’s name it Curmudgeon Works, and she will generate power at 105 dollars, then all I will receive will be $1.20……I WANT MY $2.00!!!!!!!!!!!!!!!!!

But you my friends, yes you who have no choice but buy from me, because of a Deluca, McDowell, & Adams decision to deregulate me from generating my own power, (which of course has messy costs associated with it, such as maintenance, depreciation, and scrounging around for fuel), …you, my friends, will be paying the combination or $109.20 for a large part of your power intake and our out of state neighbors, who do not have access to energy provided by Curmudgeon Works, will be paying my asking price of $208.00! That upstart company just stole $98.80 from me!…..

Coal, gas, and oil are expected to rise 30% in two years, and two years after that, another 30%, and two years after that 30% again…..I could possibly get your bill up to $300.00 and collect $12 from every one of my 330, 000 customers. Which is why I am supportive of anything that keeps Curmudgeon Works out of my territory. Yeah, New Jersey….no problem. Regional base… problem. Land based wind… problem.

The stinker for me, and winning attribute for you, is that I have to buy a set amount from Curmudgeon Works….because its a contract. There needs to be a contract so Curmudgeon Works is guaranteed some return on their investment….. Most of you have bought houses….Really, how many of you had banks tell you, don’t sign anything….just pay us what you can? Those kind of banks went belly up a long time ago…..That is why if you are going to reap the benefits of having more money in your pocket because Curmudgeon Works can offer a stupendous deal only if signed by a contract, then a contract has to be signed…..

Don’t be duped by my entreaties…The contract was not forced upon me. I negotiated the entire context of the contract so that if I was ever forced to follow through, I would do fine….Remember… doesn’t cost me anything….I automatically get 4% added on top. It is not like I will go broke, become bankrupt because of the contract…..I just will not be able to gouge you as much as I would wish…….alas……

Now like buying a house, Curmudgeon Works wants to make sure they do not lose everything when they literally “bet the house”….Therefore they put into the contract some “opt out” clauses which would keep them from having to pay me fines and penalties should they be not allowed to build because of some Gordenesque zoning law or a financial backer suddenly going bankrupt…….And of course I, happy if such were to occur (so I could once again plan to raise my rates up to $200 dollars), would readily agree to allow you to get out, if such a happening were to occur.

So that’s what’s up…..

But you know what would be even better? If I got great low prices from someone else while trying to stifle Curmudgeon Works entry into the market, and if forced to buy from Curmudgeon anyway… would win big…For instead of my buying energy at $200 to $300 for fill in the gaps caused when demand rose above what Curmudgeon was contracted to give me….I could by it at $85 to $90 from one of Curmudgeon’s competitors…….Your average between the two would drop below $100…..

But…..what I am hoping will happen….is that you like my $85 and $90 offers so much, that you scuttle Curmudgeon Works and send her riding out of town on a Harley…..and then, after she is gone, I will have to buy $300 power again to make up the difference. Once I do so, then I can pass that high cost to you , and collect close to my $8.00 based on my average cost ([$300 + $90} / 2) of $195 dollars I’m charging you……..

That’s my hope at least……