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Democratization of Electricity: Are You a Public Utility?

| Thursday October 29th, 2009 | 2 Comments

rfkSPIIn typical Kennedy-esque fashion Robert Jr. delivered a liberal-environmentalist stem winder from the main stage at Solar Power International this morning, pillorying the coal and oil industries (“carbon cronies”), and calling for the “democratization” of electric power.

He was largely referring to the perceived lobbyist-led stranglehold fossil fuels have on power production. But later in the day, members of a panel on electricity regulation (“Who Will Be the Next Regulator?”) cited Kennedy’s speech to refer to what is happening as more and more individuals, businesses, and organizations install solar panels on their property, generate their own electricity, and sell the excess back to the local utility.

The question that arises is this: if these companies are generating electricity, are they utilities?

If you have rooftop solar panels, are you an utility?

The answer for individuals is almost certainly not. For companies who sell and maintain solar panels, or rent space on rooftops to install their own, the answer is maybe, sort of, hopefully not, but possibly eventually.

Providing a public good, or just a good?

As these companies, like SolarCity of California, get bigger, the degree to which swaths of the population will depend on them to provide an essential public good — electricity — will grow.

Kristen Mayes, Chairwoman of the Arizona Corporation Commission, and one of the panelists, said, “what happens when these companies become so successful that they are utility like? Will they be prepared in 10 years for us to say you are a public service corporation [ie, utility]?”

As Mayes explained, more and more states, including her own, are grappling with this issue. The factors involved are complex, and at stake is the possible regulation of these companies as public service providers — like water or electricity utilities — placing them under a heavy, rather onerous blanket of regulation.

Too much regulation, and government could snuff out the growth of renewable energy. Too little, and thousands or millions of customers could be dependent for electricity on power companies that lack proper oversight.

Utilities, which have had to wrestle with public regulation for decades, say it’s unfair that SolarCity and others can generate all this power without being regulated. But are these companies really utilities? Or are they just providing a service or product? Or something in between?

When asked by the panel moderator, Colin Murchie of SolarCity, to come up with an equivalent situation in another industry, none of the panelists could think of one. Like any democratizing process, this mass movement is creating its own complications for everyone involved.

Ed Note: Here’s RFK Jr’s keynote speech plus the panel:


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  • Walter

    Point of use power systems are a good concept, allowing for individual responsibility over their own power production and thus leading to a decentralized system. It can avert many problems, including infrastructure such as distribution. The bad side is that roof top solar is only part of the solution, as such sources of power do not produce electricity at night.

  • http://www.craigspr.org craigspr

    I don’t see anything wrong generating your own electricity as long as it is properly regulated as not to affect other utility service providers.

    http://www.craigspr.org

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