Once again we reach out to Calinky, this time with an uncle and nephew reminiscing about the wisdom imparted by a recently departed brother and father. You'll find that you can't fix stupid, but sometimes you can avoid it.
Harry, I gotta tell ya, I was down at the fillin' station last week listening to young'uns, no offense, bitchin' 'bout their power bill and how the power company reported record earnings. Like they thought those two don't somehow go together.
Isn't the "fillin' station" that bar down the street from the "Town Pump"?
Yep, and that Whore House has the best Italian in the tri-state area. Francesca's putane...
Back on track?
Anyway it got me to thinkin' about yer dad, brother John, and how he tried to save pops from a big mistake, and how he sure as hell saved me from one. Ya see, there was this one guy preachin' hellfire and damnation to the power company and heapin' all praise and glory on his magnificent solar system. Ya remember when, back in the late '70s I think, when pops put that solar water heatin' system on his roof? Course ya don't. Anyway that thing was trouble from day one. Hardly ever worked. Almost never stopped leaking. Finally froze up and pops paid more than it cost to rip it out. Tore up the roof somethin' fierce. John tried to tell him it was a bad idea. In fact, he told him that whenever the government "gives" you money to do something then that is most certainly something you should not do. Pops wouldn't listen. Said John was showing off that fancy book learnin' he got at that trade school over near Atlanta. What was that...
Southern Tech. He went to Southern Tech, but it's gone now. So is he.
Well, 'bout twenty years after pops learned his lesson I was fixin' to get ready to learn mine. It was the late nineties, maybe early naughties, and folks were puttin' these solar panels on their roofs to make their own electricity. My neighbor got some, and upfront they were expensive, but he was so excited about all the money he was gonna save on his power bill, while neighbors like me were gonna pay and pay. Next time I was over to John's he was grillin' steaks on pops' PK...whatever happened...
On the deck. Use it every chance I get.
Good. Pops'd be proud. He didn't talk much about Korea but he loved that PK. And John, he could make that thing singe a steak just right. Durin' dinner that night I was tellin' him 'bout everybody gettin' these solar systems and how I was thinkin' 'bout getting one too. He got that look on his face. You know the one, not smilin', not frownin', just looking atcha like you're a damn fool breathin' his air. Without permission. Well, he lit into quite the lecture. While we were eatin'.
"I got no clue what problem you're trying to solve, and I'm certain you don't either. But whatever it may be let's look at what you're getting into. Now I understand the price of these systems can be all over the map, but it seems they run between twenty and fifty grand, and that's a lot of money. Let's say you're looking at thirty grand, but you ain't got thirty grand, you ain't getting it from me, so you're gonna have to get a loan. Let's say you drag this out for fifteen years, presuming you're going live there that long, then at today's interest rates I'd say you're probably looking at a payment of about $250. Let's use that. What the hell are you doing, running the A/C with the windows open? Yeah, yeah, you could get some money selling extra power back to the company, but they're gonna pay you what it costs them to generate, not what you pay. Outside of summer, that's pretty much what you're getting out of that system. During summer, you might run your A/C for free, during the day, but at night you're still paying out. You'll be lucky to save more than $100 per month on average."
"Then it gets worse. These things lose efficiency as they age, mostly in the first year, about ten percent. It slows down after that, but they will still lose efficiency. Time you pay off the loan, they ain't gonna be what you bought. They are also high tech electronics, and like all high tech electronics, next year's version is gonna be better, either at the same or a lower cost. Ain't quite like Moore's law and computers, but they're gonna get better and cheaper. Then there's hail. You do remember hail, don't you? Don't answer that. You get reminded every time you see those dents in the hood of your pickup. Shattered the windshield if I remember correctly. Hail will do the same thing to those panels. You probably don't have insurance to cover that. In fact, you may not be able to get it and if you can it's gonna cost."
By now we're done with dinner and are sitting in the den nursing our beers. Didn't slow the lecture. Not one bit.
"I'm gonna tell what you should spend your money on that's better than solar. Stock. Specifically stock in the power company. I know. You hate them. But you only hate them because they're making money. Always have. Always will. See, the power company is regulated and driven by government forces. Governments are handing out "incentives" to get companies to move to your state, and this seems to be working. This drives up demand for electricity, and the power company has to meet that demand. But they are also regulated by a Public Utility Commission that prohibits them from charging whatever the hell they want. I know it doesn't seem like that when you write that monthly check, but trust me, they'd charge more than that if they could. But the PUC also has to consider what the ratepayers are actually paying for, and in general, they would prefer that not be interest. They know meeting demand means capital investment that will require the power company take on debt, so the PUC wants to keep the bond rating high, and that means the power company must be in good financial standing. That's key to what I'm about to tell you."
"Let's say after loan payment, insurance premium, power savings and buyback that your net average monthly expense is $175. Now let's say that instead of spending that on keeping up with the Jones' that you invest that in power company stock. At current prices you'll pick up about 10 shares a month, and with the stock appreciating at around six percent per year you will buy fewer as you go along, but you'll average 5 shares per month ending up with around 900 shares. These will be worth more than you paid, and by my guesstimate they will also yield at least $1.75 per month in dividends. That's a little over $1500 per year."
"I'm gonna suggest you reinvest the dividends, and not just because that's what I do, but because this will drop that six percent stock price appreciation down down to one and a half, and you'll end up with well over 1500 shares. That's over $2600 per year in dividends. Now I am assuming you have $175 a month to invest in power company stock, but it seems like you're willing to commit to more than that anyway. See, the savings are speculative, the cost of those panels is set in stone."
I don't know if I wasn't expecting him to sell past the close, or if it was the beer, but I didn't see the knock out punch til it landed.
"Here's the best thing. Let's suppose you and Nancy stay in that house until you retire, say twenty, maybe twenty five years from now. Those solar panels will be shot, if they're even still there. You may actually have to replace the roof, which means taking them off, and then will it be worth the cost to rehang clapped out panels? Don't think so. But let's assume they are there when you retire, and that when you retire you guys move. Maybe to the beach. Maybe the mountains, my choice, but wherever. You move. You ain't taking those panels with. But those dividends will follow you anywhere, and if you want you can pay the power bill wherever that might be. And if you decide to keep up the investment past the original fifteen years, maybe five or ten more, you'll easily be looking at $3500-$4000 annual dividends when you retire. Plus, the money you invested has been safe, even from inflation. You'll have a cushion. Very likely over $100K. Looks better than solar panels to me."
That was a great steak, good beer and a damn long lecture. But I took yer dad's advice. Every word of it, and it worked out better than he said it would. We retired a couple of years ago, we did move, and we don't pay any utility bills. Not electric, not gas, not water, not even internet. It's all paid by the power company. So while I was sittin' at that bar, hearin' those whiners goin' on and on about how corrupt the big bad power company is, I thought about how stupid they are, how stupid I was, and how lucky I was to have the best big brother ever. But you're luckier than I could ever be, because he was your dad.
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