A hundred million here, a bond or two there, a federal handout — and a few million bucks from the city — somewhere else. After a while, it’s hard to keep track of the true cost of the Smart Grid, EPB’s recently completed electric system of the future.
EPB says the price tag for the Smart Grid came in at about $220 million. The Department of Energy puts the final cost of the system at $226 million. When all is said and done, however, the actual total dwarfs those estimates.
In order to begin construction of the Smart Grid system, as well as to implement the “Fiber to the Home” efforts that allowed the electric company to provide cable service and expand Internet and telephone offerings, EPB took out a $219.8 million bond.
That $219.8 million figure, however, doesn’t include the interest that will pile on top of the principal over the course of the loan’s 23-year payback period. That interest alone will cost EPB electric customers an additional $171.5 million, bringing the bond’s total price tag to $391.3 million, according to public records obtained from EPB.
EPB claims that just over 80 percent of the amount of the bond — roughly $318 million — went to construct the Smart Grid. However, since most of the remaining bond funds went to subsidize the EPB’s foray into the cable, Internet and telephone businesses — such as the purchase of cable boxes and other hardware — it’s fair to say that almost every penny of the bond ultimately went toward Smart Grid-related costs.
All of that $391.3 million bond will be paid by EPB’s electric customers … if things turn out well. If for some reason EPB isn’t able to cover the cost of paying back the bond debt, city taxpayers will likely have to fork over the difference, since the utility company is ultimately owned by, and the responsibility of, the City of Chattanooga.
But wait, there’s more …
Impressed by EPB’s Smart Grid plan, the federal Department of Energy awarded Chattanooga $111.6 million in taxpayer-funded stimulus dollars, courtesy of the American Recovery and Reinvestment Act.
But, of course, the federal government didn’t actually have the money to cover pricey stimulus handouts like the one given to EPB. So, instead, the government borrowed it.
The Congressional Budget Office estimates American taxpayers are on the hook for a total of nearly 42 cents in interest for every dollar spent on the stimulus. That means that the $111.6 million the federal government shelled out to EPB to subsidize the construction of the Smart Grid comes with an additional $46.6 million in interest. As a result, federal taxpayers will ultimately spend $158.2 million underwriting a large chunk of the cost of the Smart Grid.
And the spending didn’t stop there.
The City of Chattanooga chipped in another $2.5 million in tax money to EPB to help fund the Smart Grid — and that doesn’t even count the $2.5 million in tax breaks EPB will receive from the city if the fiber scheme fails to meet profitability projections.
So when you add up the $391.3 million in bonds, $158.2 million in stimulus dollars courtesy of federal taxpayers and another $2.5 million in funds from city taxpayers, the total price tag of the Smart Grid is a staggering $552 million. That comes out to $3,266 for each of the 169,000 people served by EPB power.
But that isn’t the Smart Grid’s only cost.
The Smart Grid was ostensibly built to prevent power outages and get power restored quicker when outages do occur, as well as save customers money by reducing waste and theft of electricity. Many EPB customers don’t realize some of the other — and more concerning — capabilities of the Smart Grid.
For example, the Smart Grid allows EPB to impose a TVA program that charges electric customers more for using electricity during peak hours. Once implemented, this means that you will pay more for running your air conditioner during a 100-degree summer day.
The Smart Grid also allows for interaction with controlled service appliances, which is another way of saying the government can control the amount of electricity reaching some appliances — such as water heaters and heating and air systems — in certain cases.
This new electric system also can monitor home electricity usage so closely that it is possible for EPB employees to determine when you wake up, when you go to sleep, when you’re home, when you’re away and even which appliances you’re using at a given moment. While that may not offend some people, many opponents of the Smart Grid raise valid concerns over privacy and government surveillance issues.
To make matters worse, EPB specifically choose its fiber Smart Grid system to be able to compete against cable, Internet and telephone companies in the free market. The fact that a government-owned utility company can force taxpayers and electric customers to pay for the cost associated with getting into the cable and telecom business is a slap to the tenets of capitalism and the free market.
After all, government ownership of companies is the very essence of socialism.
When the numbers are crunched, electric customers and taxpayers may shudder at the $552 million tab for the Smart Grid.
However, when you consider that the Smart Grid allows the government to control your appliances, tax you for using electricity at certain times, know when you’re in the shower or cooking your family dinner and compete against private businesses, the expense doesn’t end with dollars and cents.
The true cost of the Smart Grid is liberty.