Originally published on the CGS blog on February 11, 2016.
The declining costs of renewable energy, emerging information technology-related capacities for better management of electricity supply and use, and the need to reduce greenhouse gas emissions are combining to drive major changes in electricity supply in the United States and worldwide. But the existing industry structure and government regulatory practices are impeding progress. Citizen action is needed.
A study by the National Oceanic and Atmospheric Administration (NOAA) and researchers from the University of Colorado recently demonstrated that a national direct current high-energy transmission web drawing primarily on solar and wind energy productioncould cut greenhouse gas emissions from electric power production by up to 78 percent from 1990 levels while meeting increasing electricity demand at costs similar to–if not lower than–current costs. This change could be started using existing technologies.
Congress has therefore been considering bipartisan energy legislation (S. 2012) that would include provisions to take the first steps of establishing of such a grid, as well as a considerable body of other initiatives to foster “smart grid” development.
Another major development is the rapid rise of rooftop and community solar electricity generation. This has resulted in a backlash from the power industry, which feels that its monopoly status is threatened.
A recent public utility commission decision in Nevada epitomizes some of the worst features of this widely spread utility industry attempt to stymie competitive incursions into revenues by claiming that the industry must shift costs to customers or eliminate subsidies in order to maintain revenue. This is a customary pattern in monopoly defense of privileged position.
The Nevada commission explicitly ignored national and state policies designed to foster renewable energy supplies, brushed aside available studies indicating that such supplies could be integrated with electricity distribution without raising costs significantly, ignored the availability of “general rate case” formats for exploring rearrangement of supply and distribution accommodating rooftop energy supplies, assumed obligations to largely fictitious demand levels by such homeowners, double-charged such homeowners for distribution costs, and ordered cost escalations on such homeowners over a period of years on claimed need for revenue assurance. The net effect was to cater to the Nevada utility’s demand for protection of its existing revenue arrangements and handicap a competitive challenge.
Some industry analysts and citizen action groups have pointed out that use of “smart meters” and associated technologies, coupled with “smart rate designs” for pricing the contributions of the alternative solar energy supply, could lead to “right-sizing” and “right-shaping” of electricity distribution systems, as well as generation and transmission systems. A recent Utility Dive publication lists some key battlegrounds and key issues in this critical national battle over the future of electricity supply. Several states, notably California and New York, are wrestling with how to foster the competitive potentials of distributed generation in ways that increase the flexibility and lower the costs of total electricity supply. The stakes are high, both for citizens and the incumbent utility systems.
There are long-term risks to investor-owned utilities from their attempt to protect traditional monopoly status as undertaken in Nevada. As solar generation and storage costs decrease, as many foresee, substantial loads may migrate off-grid, leaving the traditional utilities in a severely limited, if not declining, position. This partitioning of electricity supply could be wasteful for consumers as a whole. Also, at least one major municipal system, in San Antonio, Texas, has in effect taken over local solar installations in an apparent effort to generate more, not less, distributed solar generation (though there is a mixed reaction to this). If investor-owned utilities continue attempting to block rooftop solar generation, they may see a backlash at the local distribution level.
The Nevada utility monopoly position is under attack in other ways. Legislation has been introduced to provide for retail choice among electricity suppliers for Nevada residents. In addition, major commercial firms in Nevada have been seeking permission to decouple from NV Energy. In a grotesque perversion of standard market economics, the utility has prevailed upon the regulatory commission there to charge these entities hundreds of millions of dollars for the privilege of finding and using more economical energy supply arrangements.
What do I suggest for CGS members? Make some noise with your elected representatives–local, state and federal. There are at least two major initiatives to be addressed.
First, make clear that you want federal, state, and local action to foster an electricity transmission superhighway in the United States in order to foster a low-carbon, sustainable electricity supply. This is a major evolution, just as was the federal highway system. Lots of institutional arrangements need to be changed. But Congress appears to be laying the groundwork for such an evolution and it needs to get under way soon. A start by 2020 would not be too soon.
Second, pressure your representatives to reward rooftop solar generation for the contributions it can make to reducing central generation and distribution costs, by means of local connection and pricing systems that recognize the values of integrating such systems with the electricity grid. It appears that Congress may be starting to pave the way for such a development by mandating a national study of the net metering issue to identify possible ways to do this. This needs to be vigorously pursued.
Both developments work to your advantage as consumers and citizens. And they are a part of a necessary global energy supply transition. Let’s keep the lights on. Our grandchildren need them.
