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Reply #13: Certainly profit is the motivator for business [View All]

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HereSince1628 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Mar-16-11 08:20 AM
Response to Reply #8
13. Certainly profit is the motivator for business
Edited on Wed Mar-16-11 08:22 AM by HereSince1628
Government has issues that involve both advocacy for the development of utilities (remember FDR's rural electrification?) and regulation of utilities. We need electricity not only for industry, but it's become a critical support for our way of life (even DU). Electricity is needed for critical activities such as health care. One can't access patient records, run a CT Scan, or light a surgery theater without electricity. So we desire electricity and would be unhappy if it were not available. Yet, Government also has need to regulate utilities to assure fair prices, safe operations, and the capacity to deal utility emergencies that could (and probably will) cause the community damages.

There is general agreement and acceptance within government agencies, that utilities can never be expected to operate with zero potentially damaging events. So, governments typically require operating standards to minimize the chance of such events and mitigation plans and assurances that resources can be made available to deal with these events after they finally do occur. Mitigation not only means capacity to have an emergency response but also to deal with community damage. Damage is often calculated as monetary damages and regulation requires offsetting securities, etc. Companies that can produce catastrophic events will be bankrupted by the events and are likely to not be able to meet those obligations--in the good times before the events, this reality is often downplayed--intentionally so by the developers and operators. In bad times the companies and their insurers try to weasel out of these responsibilities.

The political pressures on governments to facilitate utility development and service but to also protect the community, together with the limits of capital available for both needs, result in compromises that allow for limited (thereby imperfect) risk protection and limited (thereby imperfect) mitigation. That's why it's called risk management rather than risk elimination.

We (as in all Americans) live with these sorts of compromises everyday regarding safety of our utilities, homes, cars, driveways, medical care, etc. and we don't spend much time worrying about them. Certainly some our (as in the politically conscious citizens who populate DU) anxieties get raised when pro-business forces in government reduce regulatory oversight. But in normal times, that is opposed by other political forces again resulting in...compromise.

Nonetheless, when a community finds itself in the middle of a catastrophic event, those risk management decisions are always severely criticized by us (as in the affected which once again would be all Americans). We are more willing to accept hypothetical risks, than we are to accept an actual event. It's human nature.

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