Consumer math may be fuzzy, not warm

There was a high school course called “consumer math” that seemed like it was at the opposite end of the spectrum from calculus. Some recent examples make one wonder whether that class was really for the smart kids who would become government and utility functionaries, eventually needing to justify the prices paid by all the folks who thought they were smart because they could figure out the trajectory of a rocket.

Consumer math problem No. 1: The wholesale cost of electricity is $17 per megawatt hour and increases to $150 per megawatt hour, increasing the consumer cost by $131 a year. What will a drop to $72 per megawatt hour save that same consumer in a year? A: $21. B: $71. C: We could explain it, but there’s a lot of consumer math involved. You wouldn’t understand.

The answer is A.

See? That’s consumer math. It doesn’t ever work out to the consumer’s advantage.

Ameren Illinois customers paid out $131 more when the wholesale electricity cost surged, but then when it dropped to less than half at the most recent auction the expected savings will not be less than half that increase, as one might expect. You’ll save about $21 in the coming year.

Consumer math problem No. 2: City A and City B both give their disabled veterans a break on property taxes. City A suffers a $22 million drop in assessed property values and needs to raise property taxes $9.33 on a $100,000 home. City B suffers a $20 million drop but its property is worth one-third less. How much must City B raise taxes on a $100,000 home? A: $12.43. B: $70. C: Consumer math strikes again.

The answer is B and C.

O’Fallon’s $22 million drop in assessed valuation is spread to about one-third fewer taxpayers than Belleville has, yet its property is assessed at about one-third more. A $20 million-ish drop in assessed values, attributed in both cities to a new tax exemption for disabled veterans, upped taxes on a $100,000 home by $9.33 in O’Fallon but $70 in Belleville.

Right, there are valid reasons why wholesale electricity prices drop by half but homeowners do not see their increase halved, and why helping vets in a richer community costs less than helping disabled vets in a larger, poorer community. But wouldn’t it be nice if consumer math could be replaced with oughta-be math?

This story was originally published April 24, 2016 at 2:00 PM with the headline "Consumer math may be fuzzy, not warm."