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Wednesday, October 1, 2008

October 1 2008, A Day Which Will Live in Infamy

While our congressional representatives debate in Washington, D.C. about a very controversial bill aimed at saving our economic system from a total meltdown, a very similar crisis, albeit on a much smaller scale, is looming right here in Glasgow. That statement is not made to sound overly dark, but October 1 is the day that the largest increase in the cost of TVA electric power in many decades takes effect. So, in an odd sort of fashion, the pursuit of light is setting us up for economic darkness.

Nationally the proliferation of variable rate mortgages is said to be the chief cause of our economic distress. As the interest rate on those mortgages spiraled upward, many have not been able to make the larger payments. The result has been that thousands of families have seen their homes repossessed and that has resulted in the general reduction in value of all of our homes. Thus, banks who secured loans based upon the inflated values of the real estate, have become insolvent because they cannot sell the repossessed homes at anywhere near what they thought they would be worth. But you did not come here for my explanation of the national economic crisis.

The point is that the situation here in Glasgow is eerily similar to our national situation. Instead of variable rate mortgages, all of us are facing variable rate energy bills. In particular, your electric power bill from the EPB, depending on how much electricity you use and where you use it, just went up around twenty percent. For many in Glasgow that increase will be quite painful. For many more, the increase will be the “straw that breaks the camel’s back” relative to their personal finances. More folks than ever will face termination of their electric service due to their inability to pay their bill and that will send ripples throughout our local economy. The EPB certainly does not look forward to increasing the number of electric service terminations, but we don't really have any other tools to use since any amount of electricity not paid for by one customer is ultimately paid for by the rest of the customers. So far, the rest of the customers have been unwilling to subsidize those who cannot pay. Meanwhile, even folks who can tighten their belt enough to deal with this increase will also contribute to the destabilization of Glasgow’s economy simply because this rate increase, should it stay in place for a year, will extract an additional $4 million from our local economy! That means every church, charity, and non-profit agency that depends on contributions from locals to survive will feel the pressure. Four million dollars is so much, when pulled from a community the size of Glasgow in one year, that none of us will be able to avoid feeling the impact.

The national economic crisis generally results from the unmitigated greed of several folks with Wall Street work addresses. Our local energy-derived economic crisis comes from many years of TVA rates which encouraged us all to use energy as if it were a limitless resource. As a result, we have all become addicted to cheap and abundant energy but now the supply is suddenly expensive and very finite. I am not at all sure which of those sins is the more damaging. Nationally, our congress will likely vote to rescue the Wall Street sinners by borrowing more money from China, Germany, and Russia. Locally, your rescue might come from a number of actions, but being saved by Congress is not on the list possibilities. First, you could redouble your efforts to use less electric power (you know how to do this, just turn thermostats down and appliances off). Next, you could offer up effective prayers for rain (TVA can make really low-cost power with their hydroelectric dams, but those need to be attached to reservoirs full of water, and for the last couple of years they have been at record lows due to persistent drought.). Finally, you might get ready to embrace a new electric rate environment wherein you will save money by moving your electric power consumption to off-peak times (this is the savior we have been hoping for over the last several years but TVA is glacially slow at delivering to us).

Of course, no discussion about our economy can take place without also mentioning that localism, making every possible effort to buy your needs from locally owned businesses, is also a great way to blunt the impact of this economic crisis. TVA has just opened up a huge new hole through which lots of money will drain away from our local economy. Meanwhile, you have the power to start sealing that hole by trapping more money in our local economy. Whatever you buy, think about how you can buy it from a local merchant first. It might be a long process of encouraging more local folks to offer the goods and services that we all need, but even the journey of one thousand miles begins with the first step!