So, does anyone know what a monopoly is?
A monopoly is the right to be the sole provider of a certain product or service. Someone who owns or holds a monopoly does not have any real competition and is generally not accountable to the market to the extent someone in a competitive business would be.
El Paso Electric is basically a monopoly. This is because the City Council granted it basically the sole authority to provide electricity to our community. Because of this, and the governing bureaucracy, the company is essentially guaranteed a profit. That is partly why it was able to be sold to a private investment firm at a huge premium over its stock market valuation.
To the surprise of no one in our community, El Paso Electric has already started increasing its electric rates. I think it would be fair to say that everyone in this community expects the company to continue to raise its electric rates.
So, the question is: What can we do about it?
There’s very little we can do about the legal monopoly — the City Council granted those legal rights and we are going to have to live with that monopoly for many years. However, we can do something about our electricity usage. We also can pursue our own alternative sources of electricity.
I have several friends who made a decision several years ago convert to solar energy, and that has really paid off. They have several solar panels on their roofs that have been incredibly effective. I estimated the panels would pay for themselves over about seven years.
This is primarily due to the decreasing costs of solar panels, the increase in the cost of electricity, and the federal tax credits that are available. The tax credits can be substantial.
For example, there is a residential energy credit that allows us to reduce our taxes by approximately 26% of the cost of qualified property. Qualifying properties include solar panels, solar water heaters, and other similar type equipment. Interestingly, there are some solar roofing shingles, which may serve both as roofing material as well as aid in the collection of solar energy, that qualify even though they serve dual purposes.
In addition, we may be able to claim a tax credit for 10% of the cost of qualifying improvements, such as energy efficient windows, doors, skylights, insulation and certain types of roof materials. The same is true for energy efficient heating and air-conditioning systems, including natural gas and propane water heaters.
There are similar credits and deductions for business owners who install similar equipment to new or existing buildings. This credit also includes interior lighting equipment, as well as heating, cooling, air-conditioning and hot water systems.
El Paso Electric recently announced that it was going to charge a minimum fee to users who were generating their own electricity. The reason for this was, in my opinion, absolutely ridiculous. Whether or not you agree, I think we all agree that our electric rates will continue to increase, perhaps substantially.
So, if you do not like being a victim, and may have an interest in buying or leasing alternative energy equipment, there are significant tax benefits that may be available to help finance those purchases and improvements.
Let me urge you to get with your tax adviser and learn what those federal tax incentives are and how they can help make this happen for you.