There are plenty of examples of big utilities using their monopoly status and wealth – the latter derived from profits guaranteed by state governments around the US – to try to block customer access to self-generation technology.
For starters, in 2020 PG&E [Pacific Gas and Electric Company], SDG&E [San Diego Gas & Electric], and Southern California Edison between them pushed through an average $900 per year tax on consumers of solar and on energy storage systems. In making this proposal, the investor-owned utilities (IOUs) explicitly contemplated the need to tax self-consumption, including non-exporting battery systems, simply because the consumer would purchase less of the IOUs' product.
If the IOUs did not hold a monopoly over California’s electricity market, if they weren’t guaranteed a profit by California regulators which amounted to more than $48 billion in 2021, they would have no standing in demanding a tax on consumers who use less electricity. The idea is preposterous. But these three investor-owned utilities control 80% of California’s electricity market and, as a result, have undue influence over energy policy. They use their wealth and status to influence policymakers, hiring PR firms to push out fake math and false messages around equity and ratepayer protection, and they generally work to block and tackle competition in the marketplace.
California isn’t alone in this dynamic. There other examples of monopoly utilities abusing their power and status throughout the country. A 2021 report, Blocking Rooftop Solar, by J David Lippeatt, Adrian Pforzheimer, Bryn Huxley-Reicher, and Bronte Payne of sustainability research body the Frontier Group and the research and policy center of nonprofit Environment California, details more than a dozen examples.
The report points out how FP&L [Florida Power & Light], Duke Energy, and Tampa Electric Co used their power in the state to block pro-solar policies that would enable consumers to go solar. The utilities directed more than $43 million to state-level political parties, candidates and committees, including the governor, over the 2014 to 2016 election cycles.
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In another example, concerning a utility active in 16 US states, Lippeatt et al write about how, in 2020, Dominion proposed a suite of solar-only fees and charges designed to penalize solar users, totaling $750 per year.
Of course, it is not just in the US that legacy power companies take advantage of their monopoly status to harm consumer-controlled generation resources. In Australia, there has been a proposal to charge solar users for energy exports while at the same time not levying such a fee on other generation resources.
California solar companies are suffering under the uncertainty of state policy making. The “NEM-3” proceeding to modify the state’s net metering policy was launched in August of 2020 – more than two years ago. Stock prices have plummeted for publicly traded companies due to the uncertainty. The state’s small, family-run businesses – which make up 80% of the market – are being hit with more and more red tape while bracing for the negative impacts of a yet-to-come NEM decision.
Last December, the California Public Utilities Commission proposed a NEM-3 verdict that was nearly as bad as what was proposed by the utilities. It included a huge monthly tax for solar households and a dramatic slashing of the credit solar households get for power they export to the grid. The proposal faced a widespread public backlash and was immediately put on hold but a new decision has yet to be released nearly a year later.
If California ends up with dramatic overnight changes to NEM, small solar companies could simply go out of business or leave the state because the cost of doing business would go up just as the value of solar and energy storage would fall. These PV businesses, which number in the thousands and employ the majority of solar workers, have been living with the policy uncertainty for two years now. Just how they fare in the months ahead is up to California governor Gavin Newsom and the policies his administration adopts in the next few weeks and months.
At the end of the day, however, it is the consumer who loses the most. The California energy consumer is paying extremely high prices for electricity that is increasingly unreliable. When the California consumer attempts to solve this problem through self-generation, they are threatened with taxes and penalties. Nowhere is this more starkly illustrated than in the example of a working class family living in California’s Central Valley, where summertime temperatures commonly top 105 F and air conditioning loads are high and expensive. With the decline in solar pricing, these families are going solar in large numbers, driving the growth of new adoption in the past three years. The utilities’ proposed penalties and taxes would hit these consumers the hardest as they are the least able to shoulder a hit on the economics of going solar.
A utilitarian future?
Ultimately, the rise of consumer-based clean energy technologies such as solar and storage systems does not necessarily mean the end of the monopoly utility. Someone needs to build and maintain the roadways for electrons to travel on and the capacity of the grid will grow as we electrify transportation. However, we can reduce the amount of grid expansion with the build out of distributed generation, which would save everyone money. The state’s monopoly utilities might not make as much money under a high-electrification future with more local generation but they will still be very profitable. There is no death spiral for the California electric utility.
The key to balancing all the interests is to have a strong watchdog agency independent of utility influence and held accountable by the consumers it serves. To achieve this, we must have an informed and engaged populace that has real energy options and competitive markets to keep prices down. This has always been the balancing act in America. Time will tell whether California remains the incubator of innovation and consumer choice or if it falls back into the arms of the monopoly-utility past to the detriment of solar industry and consumer alike.
Bernadette Del Chiaro is executive director of the California Solar & Storage Association business group. She will moderate a talk on abuse of monopoly positions by utilities at the Empower 2022 virtual summit organized by solar software company Aurora Solar on Nov 1-2. As part of the event, Aurora will match up to $25,000 worth of donations made to the Maasai Wilderness Conservation Trust’s (MWCT's) solar PV and storage capacity project, via the Aurora/MWCT GoFundMe page.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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