Cost Recovery Ramp


When you’ve kicked the can on asset maintenance and replacement for many years in order to keep rates low, how do you dig your way out of the hole before the system really starts to implode? (yes, I know — mixed metaphor — but the images just go together so well…)

What you can’t do (as matter of political feasibility, economic efficiency and basic fairness) is just spring higher rates on everybody. But if you do it slowly, won’t that lead into can-kicking temptation all over again — while things get increasingly worse?

I think the answer has to be in a combination of (1) getting the real-world work done as quickly and efficiently as possible, (2) telling people they’ll be eventually paying for it, so get ready, and (3) and enforcing the commitment with the necessity to repay very-slowly (but relentlessly) amortizing debt.