Public vs. private utility service

I was at DistribuTECH last week in Orlando. My next conference is the ACEEE Market Transformation symposium in Baltimore March 20-22, where I’ll be presenting on “The Data Deluge: Making Intelligent Use of Big Data in Energy Efficiency.”

The coolest Lego set at DistribuTECH: wind, water and solar power! This set is definitely on my Christmas list…

Dueling Futures: Public vs. Private Utility Service

The Smart Grid Consumer Collaborative hosts its annual conference the day before Distributech, so while in Orlando I attended SGCC’s meeting on “the connected consumer & the future of the grid.” Beginning on a humorous note, SGCC hosted a debate modeled on TV’s “Shark Tank” where proponents of differing views faced off. A solar proponent brilliantly impersonated one Presidential candidate whose name rhymes with “lump”: “Trust me, folks, this is gonna be YUGE. We’re gonna make the grid great again.”

I’ve been to a lot of meetings about the future of the grid over the years, and many conference speakers have a tendency to repeat banal statements about the coming “utility transition” without really delving into the issues in a substantive way. That was not the case here. Two speakers eloquently articulated their opposing views of the electricity system. One involves decentralization and the proliferation of solar + storage – a familiar viewpoint among solar advocates, and one I generally support. The opposing argument was new to me and quite compelling: the electricity system should be a public service, and privatization, whether by investor-owned utilities or by self-generation, fundamentally undermines its central purpose.

You’re going to miss it when it’s gone

Walker Wright, Director of Policy for SunRun, made the case for distributed solar. As we all know, rooftop solar is increasingly feasible on economic grounds alone, with PV prices having dropped 80% in the last five or seven years. Despite setbacks in net metering laws such as Nevada’s (in which the compensation for solar was dramatically reduced and fixed charges of up to $38/month were enacted for solar customers), Wright saw the solar movement as unstoppable: “The utilities have nothing to offer customers, except: ‘We want to charge you $40/month to use less of our product.” He then raised his palms and cocked his head sideways, as though asking, “WTF?” When storage is cheaper in three to five years, he argued, and solar customers use their batteries at night and hardly use the utility grid at all, he says the utilities will simply trot out the same line. “ ‘Now we want to charge you $100/month for using even less of our product.’ ” Politically, Wright sees the solar movement’s success as inevitable: the grassroots power of thousands of solar customers turning out to protest fixed charges will triumph over investor-owned utilities until the utilities, seeking endlessly higher rates for fewer and fewer services, are backed into a corner.

The political destiny of the solar industry may be as certain as Wright sees it, and clean energy isn’t a bad thing, but what about the financial destruction of the utility? Readers may not have much sympathy for investor-owned utilities, what with their ~9% guaranteed returns on equity for shareholders, but people still need electricity. This is, of course, the debate over the so-called “death spiral.” Much has been written about it, and I won’t attempt to cover the entire issue here, but there is one particular argument in support of the traditional utility business model that is convincing, if little discussed: What are the good parts of society’s communal interest in the electricity system that would be lost when consumers begin divvying up small parts of the system at a large scale?

Danna Bailey, VP of Communications at Chattanooga’s publicly-owned Electric Power Board, described “the electricity commons” as a public trust that society neglects at its own peril. The public power system risks fragmentation and dissolution just as, throughout history, communal pastureland gave way to strict notions of private property; trolleys gave way to personal automobiles; and the social safety net gave way to individual retirement plans. When public commons such as public schools are neglected, then the rich can afford to make their own private schools, and by pulling out their children (and sometimes their money, through vouchers) the public schools grow weaker, encouraging more parents to explore private schools, which begins, perhaps, the educational analog of the utility death spiral.

I found the collectivism of Danna Bailey’s entreaty quite compelling. I want clean energy, but I want the grid to serve the less fortunate, too. The grid provides me with electricity, but in return for my monthly expenditure, I receive much more than electrons: I receive the benefits of an electrified society because my neighbors have power, too. Where is the collectivism of solar plus storage, when rich liberals buy solar panels and PowerWall batteries from Tesla, effectively islanding themselves from the community?

To be clear, Danna Bailey’s argument was not just against privatization, as in selling a government-run utility to a private corporation; her concern is about decentralization and privatization simultaneously. Personal automobiles are perhaps the best analog because once vehicle ownership rates exceeded a certain level, there was insufficient public support for centralized, government-run transit, and everyone needed their own car. I see old pictures of my neighborhood from the 1930s, with electric trolleys going everywhere, and I mourn their loss, even though the tracks were torn up long before I got here. Not only because of the trolleys’ immense utility to me personally; but because the community’s quality of life was improved. And once the infrastructure was gone, it’s nearly impossible to bring back.

So what’s the “we” in distributed energy resources? How do we avoid the worst consequences of privatization stemming from the booming solar movement carving up the once-continuous electric landscape into fenced parcels of independence? The more pertinent question is, how much would you be willing to pay for people besides you to have electricity? When your solar panels and your batteries meet your energy needs, how much is the well-being of others worth to you? Best to have a price in mind, because, in five or ten years, we may be forced to answer that question.

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