Sometimes, bad things happen to good people. Take electricity. The more you save, the more it may cost.
You reduce your consumption of electricity by using more
efficient equipment and appliances and changing all your light bulbs. Because you now use fewer units of
electricity – kilowatt-hours or kWhs, you expect lower electric bills.
Now look at this situation from the viewpoint of your
electric utility. It owns the poles and
wires used to bring electricity from the generator to you. In many parts of the country, though not in
Maine and most of New England, it owns the generator.
Regulators allow the utility to charge for the use of its
grid by the amount of kWhs you use. The owner of the generator gets paid much
the same way for the power itself.
With new wind generators coming on line, the utility may
have to build new transmission lines to connect suppliers in remote
locations. Federal regulators have ruled that customers
rather than power developers should pay for the cost of the new lines.
To try to avoid such rate increases, the Maine Public Utilities
Commission is now considering how to develop non-transmission alternatives
(NTAs). It seems to be headed toward some
sort of central control rather than requiring that NTAs be considered whenever
new transmission is proposed. Utilities
themselves might be allowed to offer NTAs for their own customers
But there is also the problem of wires costs increasing even
with no new transmission, because customer use is decreasing. Utilities face a problem under the current
rate system. By raising kWh rates to
recover their costs, utilities run the risk of encouraging customers to cut
their use even more.
You can reduce your consumption through conservation and
efficiency, but your bill will not decline.
In fact, it is likely to increase because of reduced sales, some
customers quitting the grid entirely to self-generate or when remote renewables
are added.
The trade organization of the investor-owned utilities has
said its members face a “death spiral.” The
obvious solution from the utilities’ perspective is to charge for the wires
without linking the rate to the number of kWhs.
The utility reasons it was authorized by regulators to build
new transmission lines and to recover their costs from customers, and it went
ahead based on that assurance. The regulators
should honor that deal by allowing a new way to recover costs.
The problem exists for wires, but not really for
generators. The owners of power plants
are supposed to be investors taking on the risk of a competitive market. The wires companies operate regulated
monopolies where there is no direct competition.
One solution would be to charge each customer a fixed fee
while reducing the unit charge. A Wisconsin utility proposed that plan, but was
forced by consumer protests to drop it.
This looks like a serious problem with nobody at fault and
no way out. But, realistically, the
wires companies cannot be allowed to fail.
Perhaps the solution comes from how you look at the
problem. The current model is based on
the electric utility as it was invented in the Nineteenth Century. But the world has changed, even if the
industry lags behind.
People are increasingly interested in avoiding the grid and
the costs of power supply, even if competitive.
An executive of NRG, a generation company, says the country faces the
“era of personal power.”
People are reducing their use of electricity from the grid. Efforts to promote renewables and efficiency
are paying off. Most important, people
accept change far more readily than in the past.
The new smart meters and the smart grid, already paid for by
customers, can realize their potential and integrate power coming off utility
lines with local measures. That should
be done automatically without the customer having to control switching.
In an important new development, Tesla, the battery powered
car company, has just announced that it expects to launch home-level electric
storage in about six months. That would
make renewables more reliable and encourage purchasing from the grid only when
low-cost power is available.
Answering the problem of falling customer demand could turn
out to be the salvation of utilities.
If they get fixed fees, these charges should be phased out over a set
period, and the utilities should be allowed to try to make up for lost revenue by
setting up unregulated affiliates to compete with others in providing “personal
power” and NTAs.
This is the new world for electric customers and utilities,
and both could benefit from it.