Decoupling Selling from Profit

I recently testified before the Senate Environment and Public Works Committee. One of the other witnesses was Peter Darbee, CEO and President of PG&E Corporation. In his testimony, he argued that his company had no special interest in the energy rationing fight because California had adopted the “decoupling” policy which ensured that his firm was able to make as much revenue by “not selling” electricity as by selling it.

This idea—supported by the Natural Resources Defense Council, Amory Lovins, and many within the utility industry—is strange. Imagine if grocery stores were regulated utilities, each enjoying a regional monopoly over the selling of food and other basic needs, and were guaranteed revenue regardless of whether they sold anything or not. One can imagine stores promoting diet classes, raising food prices (California’s electricity is among the highest priced in the nation), becoming ever less sensitive to the quality and variety of foods displayed, downsizing portions of food, and so forth. And, of course, they would then be far less concerned about the challenges of organic food, the trans-fat battles, sugar subsidy programs, and the like. What twisted webs we humans weave, when first we elect to regulate!