Imagine that you are an advisor to Mayor Quimby of "Springfield USA". Your town has a rather large economically diverse population ... mostly middle class, but some living on fixed incomes near the poverty level.

The city gets its electrical power from the "C. Montgomery Burns Power Company Inc." This is a regional, publicly traded power company with a single nuclear power plant located in the city. As a regulated monopoly, the electrical rates charged to the citizens of Springfield are set by the "Springfield Utility Commission". The commission sets electrical rates as low as they can while assuring that the Burns Power company can cover their costs plus provide a "fair" profit to the stockholders of the company.

While Mr. Burns owns controlling interest in the company, much of the stock is owned by older citizens of Springfield on fixed incomes because, as a regulated monopoly, utility companies are less risky than companies subject to the whims of a free market, electrical power is a necessity so is not sensitive to economic volatility, and the rate setting policy of the Springfield Utility Commission ensures that the power company will be profitable ... which in turn assures the elderly stockholders reliable dividend income.

Mayor Quimby knows the drawbacks of having a nuclear plant in the city and would like to encourage the installation of solar panels and use to windmills to generate electricity using clean sustainable methods.

The Mayor has suggested that to help citizens defray the cost of the solar panels he is thinking of passing a law to require the Burns Power Company to buy any excess electricity that citizens generate.

Mr. Burns is livid! He does NOT want to buy power generated by citizens because he already has excess capacity he cannot store, the solar panels will decrease demand from his plant (revenue) and he is asking the Springfield Utility Commission for a rate increase to compensate for reduced power demand (revenue loss) and he even wants a surcharge or higher rate approved for customers who have solar panels and are only using his power for backup and during periods of peak demand. These rate increase requests are based on the fact that his company has made large capital investments to build the anticipated capacity to meet anticipated demand ... which will not occur if there is widespread, residential use of solar power.

He furthermore argues that the solar panels should be illegal because he and his stockholders were granted a monopoly to serve the area. The entire financial and operational configuration of his company is based on this assurance. But now, these solar panels are turning every household into a competitive supplier of power, thus jeopardizing the financial stability of his company and the elderly stockholders who depend on the income of this plant.

• Does Mr. Burns have valid points?
• Who is helped / hurt by the installation of the solar panels?
• What advice would you give to Mayor Quimby?
• What would Homer do? (Besides going to Mo's for a cold Duff beer