Well, since it’s your beat, policymakers in the 1930s understood that rural electrification was a simple, uneconomic welfare scheme. Which was why the IOUs wouldn’t touch it.

Love the idea, hate the execution. Better not buy old, largely depreciated assets at hi prices. Better to aggressively build renewables, bankrupt the encumbent, and buy their assets for pennies on the dollar. That’s what they’d do to you.

The key is knowing that both are true. The first challenges your supposedly unique information and the second challenges your valuations.

That’s why they never made sense to me as “house” plants. In what way does my living room resemble a rain forest?

It’s not ”novel”. None of these are. See Monju, sodium cooled reactor in Japan. Hint: it didn’t end well.

If you’re curious look up the Monju sodium cooled reactor built in Japan. Hint. It didn’t go well.

The utilities have turned condemnation into a very lengthy slog.

If you took over the existing utilities, you’d be purchasing overpriced, largely depreciated assets at a huge premium. It would make more sense to aggressively build renewables, steal load, bankrupt the encumbents and buy their assets for pennies on the dollar. That’s what they’d do to you.

You just explained Keynes in one sentence.

Hi Kevin, the coal number only looks surprising because it violates the narrative of coal to gas etc. Old, fully depreciated coal plants are still cheap to operate and will re-enter service in hi demand periods like now. What would be a surprise is either expensive retrofits or even new build.

Yes it looks that way but the good new is that renewables are displacing fossil gas. The bump in coal is from the AI/bitcoin mining or whatever demand spurt which has pulled old, fully depreciated plants back into service. This can’t go on for long.

As a policy matter it’s not about affordability as such. If you increase exports at some point the commodity’s price is set globally, like oil, and not domestically. This means much higher prices and greater price volatility for consumers.

The one positive element here is the large amounts of new renewable generation to be built, mostly wind/some solar, and that these new resources will displace some fossil fuel usage.

We don’t disagre. As someone who was fired at a Wall St firm over Enron many moons ago, my point here is that the present cases show abuse of SPV leverage and Moody’s called them on it. Lease accounting has lots of abuse potential.To me that’s the story.

I get the temptation to demonize SPVs as a former bond analyst.
But right now this is merely aggressive accounting. What made Enron unique was widespread fraud (Fastow et al) and a major accounting firm (Andersen) willing to facilitate it.

With apologies to Dr Hirschman

Agree. It’s the gas well head freeze offs. It’s always the unwinterized well heads. Not to mention the occasional frozen coal pile.

Excellent article, thanks, but he was really being extremely nice to fossil fuel interests whose power plants, especially gas, have performed rather poorly under extreme winter conditions. The exact opposite of reliability.

The Dunkelflaute in Europe is a real thing.

I don’t think the nukebros even know what hit them. Renewables will destroy them. France is now cycling it’s nukes, at great expense, due to all the renewable energy in Europe.

The simple answer is that electricity will have to be “priced” as a public good not a consumer good. If the utility was municipally owned they would simply build the capacity they needed and finance it all with lo cost debt.

This actually hurts the natural gas industry. If coal is “clean” too, that undercuts one of the key selling points for gas, that it’s cheaper and “cleaner”. Also, coal plants operate better in winter which could matter more in the future.

utilities have a financing disadvantage here if they use their conventional 50/50 equity debt capital structure. These new low risk assets should be financed like leveraged leasing companies with mabe 15% equity.

We don’t disagree. Just recalling that by vigorously opposing the war and Lyndon Johnson he helped Nixon appear as the peace candidate and we know how that worked out.

Well in that case there’s no Nixon Presidency either after he disrupted the Chicago Democratic Nat’l Convention in ‘68 and made the party look terrible.

Several major nyc architectural firms made presentations to the board on how they would repurpose the five story (!) barn as a museum.

The regulators can’t help a monopoly utility facing price competition from cheaper renewables. Their tools are inadequate to the purpose. (And the capital structure models they’re using are wildly inappropriate.)But you were right before. There will be bankruptcies.

All the regulators can do practically speaking is raise or lower rates. By raising utility rates in this case they further hurt the competitive position of legacy utilities and hasten the minimum scale issue. Said differently they can only make the death spiral worse, not better.

Good point. But you’re forgetting the critical role of the bond markets/rating agencie in heavily leveraged companies. Once the bond raters acknowledge meaningful financial erosion and threaten downgrades regulators understand that as a vote of no confidence.

I think yours is an underappreciated idea. The holy grail for batteries is really long duration storage at scale to smooth out seasonal variations in power usage. But right now we can, with relative ease, repurpose base load coal or gas for that.