by Tiffany Rossi (section 1 fall 2011)
Thus far, in my educational career, I have learned new and interesting ideas revolving around the term, economics. These new concepts have enlightened me to a new way of thinking. For instance, the way in which I interpret and analyze articles is different. I can extend my knowledge of marginal cost, marginal benefit, and opportunity cost onto article clippings or newspaper reviews.
These new, interesting ideas may be applied to an article I recently read, New Electricity Meters Stir Fear, by Felicity Barringer. Throughout the article, Barringer discusses the use of wireless smart meters in traditional homes in Northern California. These smart meters record live data regarding customers’ use of electricity. Barringer presents incentives for the meters such as using the information obtained to help reduce unnecessary electrical costs, thus, decreasing the customers’ bill. However, along with marginal benefits (reduced cost of electric) comes a marginal cost. Customers may feel these new smart meters violate their privacy or present them with unhealthy living situations, for example, exposure to radiation poisoning (similar to that of cell phones and other electronics). While there has been no evidence to support this theory, citizens of Northern California are deeply angered by the introduction of wireless meters. On the topic of privacy, Vice President Owens, explained how privacy has and always will be important to the company, Edison Electric Institute. Unfortunately for EEI, their customers have decided the marginal cost of smart meters does not equal the possible benefit. Furthermore, if the customers of EEI were to evaluate opportunity cost versus accounting cost of smart meters, they may be better equipped to determine if MB is more than MC. For example, OC will encompass non-monetary items, such as privacy and health conditions; whereas, accounting costs will not incorporate those factors. From the viewpoint of a customer of EEI, OC is higher, therefore, the customers won’t support new, smart meters.
Overall, as EEI progresses through this year, it will be an interesting battle. Can the company reduce the marginal cost or increase its benefits to its customers, in return allowing them to install smart meters. Or will the lack of incentive prevent EEI from overcoming their obstacles?
In short, economics may be applied to nearly anything, from the decision to buy a car to waking up in the morning. Economics uses incentives, marginal benefits and costs, and opportunity cost to evaluate better options. Economics, a social science, a science in general, without it, how could we make sense of our economic endeavors?
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2 comments:
I feel that the battle for electic usage and conserving power bills will fail in Northern California. One of the main sources of income is Marajuana as a crop, which obviously, their Opportunity Cost is going to always outshine the electric company and their meters.
Due to the fact that one of Northern California's largest uses of electricity is illegal, I believe that Opportunity Costs will always be greater than Marginal Benefits for residents. (The resident's income would be taken away in the act of attempting to save a few dollars on their electricity bill).
I believe that either EEI is recieving incentives to try to look efficient, for the guise of someone attempting to stop the growth of marijuana, or they just don't know their customer base.
This company is also a Shareholder owned company, which I believe is for profit. This raises the question "why would they, as a company, have any interest in lowering their profit margin?"
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