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.
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.
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.”
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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Bill Roth is a cleantech business pioneer having led teams that developed the first hydrogen fueled Prius and a utility scale, non-thermal solar power plant. Using his CEO and senior officer experiences, Roth has coached hundreds of CEOs and business owners on how to develop and implement projects that win customers and cut costs while reducing environmental impacts. As a professional economist, Roth has written numerous books including his best selling The Secret Green Sauce (available on Amazon) that profiles proven sustainable best practices in pricing, marketing and operations. His most recent book, The Boomer Generation Diet (available on Amazon) profiles his humorous personal story on how he used sustainable best practices to lose 40 pounds and still enjoy Happy Hour!