Why the rise of green energy makes utility companies nervous.
Currently, utilities plan their operations around the busiest day of the year, making sure they have the capacity to meet peak demand on the hottest August afternoon. But as Green Mountain Power modernizes one home after another—so far it’s enabled a few dozen fully remodelled “E-homes” and more than a hundred partial makeovers—the utility gains the potential ability to briefly turn down water heaters and air-conditioners during high-usage periods. This “demand management” allows the utility to avoid peak charges from the regional power grid and can save it hundreds of dollars per customer each year.
.. Aguably, the era’s most disruptive technology is the solar panel. Its price has dropped ninety-nine per cent in the past four decades, and roughly seventy-five per cent in the past six years; it now produces power nearly as cheaply as coal or gas, a condition that energy experts refer to as “grid parity.”
.. But many utilities see residential solar power as an existential threat. In 2013, an industry trade group called the Edison Electric Institute warned that utilities face what company executives were quick to call “a death spiral.” As customers began to generate more of their own electricity from the solar panels on their roofs, utility revenues would begin to decline, and the remaining customers would have to pay more for the poles and wires that keep the grid alive. That would increase the incentive for the remaining customers to leave.
Since the death-spiral session, utilities around the country have sought to slow the growth of solar: by supporting laws and regulations that would reduce targets for renewable energy; by ending “net metering” laws that force utilities to pay solar customers retail prices for the surplus energy they put back on the grid; by imposing “connection fees” to make up for lost revenues. Much of the campaigning has been spurred by the right-wing American Legislative Exchange Council and funded by various groups linked to the Koch brothers and their fossil-fuel fortune.
.. “The utilities were always convinced that they could throttle down solar just by tuning down the rebate they were offering,” Rive said. “What caught them off guard was when costs came down to the point where we didn’t need their rebate for solar to make sense.
.. You have to pay your dues, come up through the ranks. You become C.E.O. when you have five years, max, left. Some of them are just not worrying about ten, fifteen years in the future.”
.. But, in the odd world of regulated utilities, a company like Con Ed traditionally makes money by building more stuff: put in a billion-dollar substation and you can “rate base” it, making customers pay the cost, plus a ten-per-cent markup, for decades.
.. “It’s kind of a Hannah Arendt thing,” he said. “There’s not a lot of intentional evil in utilities. But we’ve created a golden cage for them, protected them from enormous trends.”