Utilities Fighting Lower Electric Bill Zombie Apocalypse

Has this summer’s heat waves got you worrying about a high electricity bill? Your electric utility is worried, too. But in a different way. Increasingly, clean technologies like solar, batteries and smart appliances are costing less due to global growth in manufacturing economies of scale plus technical innovations. Utilities fear an epidemic of customers investing in these technologies to reduce electricity bills. To utilities, this looks like a zombie apocalypse!

Disregard the potential of customer-owned technologies reducing pollution. Forget about how these technologies could generate hundred of thousands of new jobs across America. To utilities the idea of customer-owned technologies hooked up to “their” grid to lower electricity bills is nothing less than a catastrophic infection.

The utility industry is using rules, regulations and legislation designed around what it calls “revenue preservation” to destroy the economics of customer-owned clean technology. To a utility, revenue preservation means they must be reimbursed for whatever decisions and investments they made that their regulators deem “used and useful.” What revenue preservation means to a consumer is a higher electricity bill than what they could achieve if their own technology choices were successfully integrated into the grid.

How utilities use demand charges to block your ability to lower your electricity bill

In a deja vu of the rating agency’s participation in creating the Great Recession, Fitch Rating has published recommendations on what utilities should do to protect their self interest at the expense of higher electricity bills. Fitch Rating encourages utilities to keep rates high through demand charges that assign grid infrastructure costs to customers. Demand charges can be the perfect customer-owned solar killer. It allows utilities to charge a huge price for grid connection even if a solar system is fulfilling 100 percent of a customer’s energy consumption.

The question is: Why did Fitch even bother printing such a recommendation? The utility industry already understands this. The industry’s Edison Electric Institute (EEI) published a paper encouraging utilities to adopt demand charges to blunt customer adoption of “distributed generation.” Distributed generation is the utility industry’s code word for customer-owned solar, wind and fuel cells that reduce electricity bills and utility revenues.

There is a telling distinction between the Fitch publication and EEI’s. Fitch tells it like it is by urging utilities to use demand charges to keep customer bills high. The EEI publication is wrapped in language about “customer fairness.” EEI’s argument is that it isn’t fair for one customer to invest in technologies to lower their bill because customers who do not invest end up paying more to make up the utility’s “lost revenues.” What is obviously missing in EEI’s perspective is a utility’s obligation to keep bills low in the face of competition just like businesses not protected by regulators and legislators.

Will Nevada be ground-zero for the low-bill zombie apocalypse?

Nevada could be ground-zero of the lower-bill zombie apocalypse. The state’s utility and regulators chased out solar competitors through a rate redesign that eliminated solar’s economic benefits. This has cost jobs. When SolarCity left Nevada, it took 550 jobs with it. This job loss is significant. NVEnergy, Nevada’s electric utility, employs approximately 2,000 work associates. SolarCity’s job loss is equal to NVEnergy cutting its workforce by over 27 percent.

The Nevada regulatory commission also retroactively applied this new rate design to people who had invested in solar. A fireman gained 500 signatures on his protest letter explaining how his $25,000 home solar system is now worthless. Consumers reacted by supporting a November ballot initiative restoring solar economic benefits. This initiative was just blocked by the Nevada Supreme Court based on a finding that the language used was “inaccurate.”

In the meantime, Nevada casinos (MGM and Wynn Resort) have announced their intentions to disconnect from the grid. This is the rationale for doing so presented by John McManus, MGM executive vice president: “It is our objective to reduce MGM’s environmental impact by decreasing the use of energy and aggressively pursuing renewable energy sources.”

A customer-focused grid

The potential lower-bill zombie apocalypse is symbolic of the global Green Economic Revolution. In the Green Economic Revolution, technologies like solar win price-competitive advantage against less sustainable technologies like a utility grid that is anchored by base load fossil-fueled power plants. (Based loaded power plants are designed to turn on and run. This contrasts with power plants designed to cycle in alignment with the customer’s ability to shape their load using solar, batteries and smart building technologies.)

Reconciliation could be achieved if the utility industry asked itself this question: What business wins a war against voters/consumers? The business reality is that customer-focused clean tech is achieving declining costs from global manufacturing economies of scale and innovation. The utility industry’s technology has an increasing cost curve.

The more the industry uses its lobbying power to preserve its revenues, the more it sparks a populist rebellion. Its current rules and regulations, where the only good clean tech is one that the utility can meter, is unsustainable based on customer/voter satisfaction. Consumers want lower electricity bills, reduced pollution and the jobs that clean tech can bring to their communities.

What if Nevada succeeds at becoming ground-zero of a lower-bill epidemic? Dream about that as you pay this summer's high electricity bills! Then try to join the rebellion for lower electricity bills with your vote, and if the utility permits, investing in clean tech.

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