Has this summer’s heat waves got you worrying about a high electric 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 electric 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 customers owned technologies hooked up to “their” grid to lower electric bills is nothing less than a catastrophic infection.
The utility industry is using rules, regulations and legislation designed around what they call “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 electric 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 electric 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 electric 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% 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 electric 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 of the low bill zombie apocalypse?
Nevada could be ground zero of the lower electric 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 with it 550 jobs. 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%.
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 of disconnecting from the grid. This is the rational 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 electric 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 their revenues the more it sparks a populist rebellion. Their 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 electric bills, reduced pollutions and the jobs that clean tech can bring to their community.
What if Nevada succeeds at becoming ground zero of a lower electric bill epidemic? Dream about that as you pay this summer’s high electric bills! Then try to join the rebellion for lower electric bills with your vote, and if the utility permits, investing in clean tech.
About the author
Bill Roth is the author of The Boomer Generation Diet, now on sale at Amazon! Here’s what Jen Boynton, Editor in Chief of Triple Pundit says about the book: ”Written in Bill Roth’s lovable, relatable tone. The Boomer Generation Diet is a must-read for any Boomer who is looking to jumpstart their health and have fun at the same time. I hope my parents read it!” Follow Bill on Twitter and Facebook.