Power Outages: Quick Solution to Prevent Them

Power Outages: Quick Solution to Prevent Them

Power Outages: Quick Solution to Prevent Them

I want to toss out an idea for comment regarding power outages.  In the present storm, my power was restored within two days.  The  last time in August/September 2o11, it took almost seven days.

When large disasters occur, utilities bid for the services of power crews that are out of the area.  There should be some incentive to make them bid aggressively for additional power crews.

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Here is my incentive:

  • Those not restored in 3 full days get one month of free electricity.
  • Those not restored in 5 full days get three months of free electricity.
  • Those not restored in 7 full days get one year of free electricity.

The idea is threefold:

  • The utilities pay in their own product, thus softening the blow on them.
  • As time progresses, the costs/inconveniences mount for those without power; this gives companies an incentive to bid for power crews, because the longer people are without power, the greater the future revenue loss.
  • The results of the penalty get delivered to those most inconvenienced, and in a way that is fitting — you might even have some people smiling as they sit in the dark, knowing that their reward builds exponentially as they wait.

I like this idea, because it is a minimalist way of giving incentives to the utilities to restore service.  In both this disaster and the one last August/September, my local utility said, “We are doing all that we can.”  Nonsense.  Other utilities were more aggressive in bidding for power crews.

Comments are welcome.  This idea is just a rough stab, but I think it would go a long way toward restoring equity to those that are most inconvenienced be power outages.

PS — As an aside, as the internet has become more important in the lives of people, and even more the mobile internet, it is fascinating to watch how people seek out opportunities to charge up or log in as the crisis progresses, much as they would seek out ice, nonperishable food, and other necessities as the crisis progresses.

By David Merkel, CFA of  alephblog

David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.
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