Sunday, October 12, 2014

Letter to My City Council Member

I have gotten a couple of quotes on installing photovoltaic solar panels on the (south-east facing) back roofs of my house. If I fill these roofs, it looks like I can generate about 105% of our house's electricity needs.

The extra 5% is the rub. According to the solar salespeople, KU will credit me for excess electricity I generate, and apply the credit in months when I don't generate enough. But anything left over after 1 year, KU basically keeps. So the salespeople recommend doing fewer panels and targetting 97% of our needs so we don't wind up donating to KU.

This does not seem right. I would like to max out the clean solar electricity I produce, and it seems like it benefits everyone if KU purchases my excess. I would expect them to pay me the wholesale rate and make a profit on the deal. But for me to have to donate the excess to them seems unfair -- although I will probably do it anyway, in the interest of all our health and trying to address the climate crisis.

Could the LFUCG pass an ordinance requiring KU to purchase clean energy from its customer base who have excess solar capacity? Already, the case for solar here is not compelling - our dirty coal-produced electricity is too cheap. The payback period on the capital investment in solar is 14 years, even factoring in KU raising its rates - so this is not a great investment. (In Ohio and Indiana, electricity rates are high enough that the payback period is under 10 years). Anything that could be done to help consumers like myself recoup any of their costs would create more incentive to move to a renewable energy source.

I have read that typically utilities will fight such measures -- they prefer to keep everything centralized. In many cases this has led to the cities or other government entities purchasing the utilities, so the citizens can make the decisions they want as they push to renewables. Given our failure to purchase the water company a few years ago, I doubt this would fly here. But the threat could be a stick with which to beat on KU.

Wednesday, October 01, 2014

Piketty's Capital Tax Applied to 10 Richest Americans

In "Capital in the Twenty-First Century", (reviewed extensively here), Thomas Piketty calculates that with a 3% capital tax on fortunes over $10M, the US national debt would be paid off in 5 years.

This year's Fortune 400 just came out. I wondered, how would the 10 richest Americans be affected? Here's the result:

Name 2014 $B Gain $B ROC 3% tax $B Net Gain $B
Bill Gates 81 9 11.1% 2.43 6.57
Warren Buffet 67 8.5 12.7% 2.01 6.49
Larry Ellison 50 9 18.0% 1.5 7.5
Charles Koch 42 6 14.3% 1.26 4.74
David Koch 42 6 14.3% 1.26 4.74
Christy Walton 38 2.6 6.8% 1.14 1.46
Jim Walton 36 2.2 6.1% 1.08 1.12
Michael Bloomberg 35 4 11.4% 1.05 2.95
Alice Walton 34.9 1.4 4.0% 1.047 0.353
S. Robson Walton 34.8 1.5 4.3% 1.044 0.456

It looks like the Waltons have pretty crappy investment strategies. Their ROCs (Return On Capital) are only 6.8%, 6.1%, 4.3%, and 4.0%. For the other 6 richest, Piketty's assertion that the normal returns of the very rich are 10% or greater appears to hold up: the returns are all between 11.1% and 18.0%. These 6 all would see their capital increase by over ~$3B, even after paying the 3% capital tax. The richest man in the US, Bill Gates, would still have had a capital increase of $6.57B.

Five years of this and the national debt is gone - and the rich still still getting substantially richer! With the 1% tax on Wall Street transactions raising $1T per year, annual deficits are gone too, with money left over for education and infrastructure. Debt crisis over! Wow, it really doesn't seem that hard, does it?

The data comes from this Yahoo article.