Rethinking the Regulation of Our Electric Utilities

Here’s an article that points to one of the many issues we face in our quest to integrate large amounts of solar energy into our grid-mix: all this distributed generation is making it tough for the utilities.  In 43 of the 50 states, net-metering programs force them to pay home-owners the retail rates of electricity for any extra that the customer may want to sell back to the grid, meaning that the customer gets to use the distribution system for free. Given that there is no free lunch, this passes those costs onto the utility, which really means passing them onto other (generally less-affluent) rate-payers.

The New York Times claims electric power utilities are “in almost panicked tones… fighting hard to slow the spread” of rooftop solar.

Obviously, this is not what  we want, as American power consumers.  After all, we’re managing our budgets, but we’re also managing the health of our lungs and ecosystems.

It’s time to rethink the entire enterprise of regulating utilities, as there are so many things different about what we want from them today, as compared to 100 years ago when all of this was established.  In particular, we want to encourage them to sell us less, not more energy.  We want clean energy – and a sharp ramp-down of coal.  This means investments in grid infrastructure of all types: energy storage, smart meters, high-voltage transmission lines, consumer awareness programs that encourage efficiency and conservation, and yes, installation of solar (as well as microwind, geothermal, etc.).

The good news here is that some of this may already be underway.  As I wrote a few months ago, it appears that there is a progressive force in the U.S. Federal Energy Regulatory Commission.  If FERC chief nominee Ron Binz lives up to what I’ve read about him, he really is the man for the job, as he appears to be both willing and able to rewrite the way utilities are regulated, paving the way for a far more aggressive tack vis-à-vis energy efficiency and renewables.

On a related note, all this smart grid stuff really does sit squarely on the critical path to the integration of renewables.  I feel so strongly about this that I’ll soon be focusing the efforts of one of our interns on research to identify the very best and most overlooked smart grid solutions, for inclusion into our list of green energy investment opportunities.