The state is willing to approve utility rate increases. It is willing to subsidize capital through municipal bonds. The problem occurs in determining a "reasonable return" on capital expenditures for infrastructure.
A few decades ago during Carter's inflation (think California here, that's what I am familiar with), the state demanded utilities expand to service new populations but denied them a competitive return on capital expenditures. How can the Public Utilities Commission increase rates enough, morally, to guarantee 25% return on the cost to build gas and power lines, generating plants, etc. to keep pace with 18% inflation plus a decent profit?
Utilities had a dilema, ask investors to buy utility bonds paying 8% interest when inflation is 15% and Treasuries are paying 18%, or use its availabe capital to diversify into areas where they had no expertise.
This is what led to utility hedges, Enrons and the like. Utilities divesting production from transmission. Utilities buying sporting goods and drug store companies. And going broke. Because the state refused a competitive return on investment yet required capital expenditures.
Now we see the same thing with alternative fuels.
If the state is going to mandate and subsidize something, private industry will capitalize on it before any benefit is seen by a taxpayer. Ask corn farmers. Ask Al Gore.
yitbos