Let’s Talk About Solar, Equity, and Monopoly Power in 2021, by JOHN FARRELL | DATE: 22 DEC 2020 |
Since ILSR wrote about the Dawning of Solar Cells (pdf) in 1975, we’ve been fans of the potential to integrate energy production with the local economy. We provided early forecasts of the rooftop solar revolution and support for the first statewide value of solar policy. Recently, we analyzed how distributed solar and energy storage could compete with peaking fossil gas power plants and reverse the power relationship between utilities and customers. In 2020, conclusive data emerged to suggest that distributed solar isn’t just economically competitive or a superior job creator, it’s better for everyone.
A late 2020 study––Why Local Solar For All Costs Less: A New Roadmap for the Lowest Cost Grid––confirms that prioritizing distributed energy is the most cost-effective clean energy strategy for everyone connected to the electric grid, including non-solar owners. And that’s just the electric customer benefits. Widespread distributed energy adoption also means more distributed economic impact, more employment, and reduced environmental impact.
Unfortunately, electric utilities (especially the private companies with shareholders) aren’t interested in this trifecta of benefits. For many, like Dominion Energy, rooftop solar means reduced demand for their product (think fossil gas power plants) that threatens their profits.
The most important thing we can do in 2021 energy advocacy is to acknowledge the fundamental tension between a monopolized market structure and an equitable clean energy future.
Energy policy is more than electrons. Distributed solar ownership builds countervailing power to monopoly utilities by shrinking their market share, their profits, and their ability to twist the political and regulatory systems in their favor. California hasn’t just built gigawatts of distributed solar, for example, it has built a several-hundred-thousand-strong lobbying force for energy choice and solar rights. As a result, the state features some of the best market opportunities for non-utility power, including rooftop solar (and batteries), robust markets for distributed offsite solar, and options for communities to take charge of their electricity supply. It also has some of the best and most deliberate policy to put clean energy rewards into communities most harmed by fossil fuels. Distributed solar is not a panacea for captive customers of a monopoly utility that’s skimping on maintenance to line shareholder pockets, but it did mean investor-owned Pacific Gas and Electric had to go bankrupt rather than get a public bailout.
In contrast, states with entrenched monopolies have witnessed their electric utilities engage in a “bonfire of risky spending.” Utility executives rely on the electricity system’s bizarre form of corporate socialism: the ability to abuse captive customers to bail out the executives’ bad bets. Over the past decade, just a handful of corporate utility giants in the Southeast have wasted more than $40 billion on risky investments, all to be paid by customers who already have some of the highest energy bills in the country. Not coincidentally, some of the same utilities have mounted the most vociferous fights against customer-owned solar.
Get chapter and verse on the panoply of bad utility behavior from the Energy and Policy Institute, which has uncovered utilities paying actors to pose as concerned citizens, bribing legislators and commissioners, and cutting off power to poor folks and black and brown folks during a pandemic even as they reward their CEOs.
At the end of 2020, the United States faces a triple threat: a climate crisis, a public health crisis, and a racial inequality gap. Corporate power is at the center of all three. The license of fossil fuel companies and utilities to pollute without consequences caused the climate threat. The lobbying of corporate health giants has undercut the public health system’s ability to respond to COVID-19. Racialized laws, from chattel slavery to Jim Crow to redlining, covered up rules to preserve the wealth of powerful plantation owners and CEOs in a cloak of racial animus.
The solution is to reduce the power of monopoly corporations; in the energy sector, that means prioritizing distributed solar. That’s why ILSR created a partnership to advocate for 30 million solar homes, focused on the most vulnerable, as part of any federal climate policy and economic relief package.
This policy, by itself, won’t completely solve any of the three crises facing the United States. But, especially if used to target folks at the margins, it will create millions of good jobs, reduce energy bills, grow wealth, and reduce our reliance on monopoly utilities for essential electricity service. It will create 30 million ready-to-activate households to support distributed and democratic energy systems, ready to turn out to oppose utility bailouts, nuclear boondoggles, and excessive profits.
Because rooftop solar happens where people live, it also creates an opportunity to more fully engage cities in managing the energy system. Cities have proven that they understand the links between our three crises better than most levels of government. Already 150 cities, representing tens of millions of Americans, have commitments to 100% renewable energy. Some cities, like Seattle, have adopted taxes on big corporations to fund local climate and equity initiatives. As covered on our Local Energy Rules podcast, several cities have also linked their broader climate policy to its local health impacts (such as the link between particulates and asthma).
CNN Correspondent Jake Tapper described the first presidential debate between Joe Biden and Donald Trump in a way that could describe the entire year of 2020, as well as the futility of relying on monopoly utilities to provide an equitable energy future: “That was a hot mess inside a dumpster fire inside a train wreck.” Let’s get off the monopoly train in 2021, starting with 30 million solar homes.
This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update.
January 2021: A new report from the Institute for Local Self-Reliances shows that America’s monopoly problem is bigger than you might think.
While last year’s Big Tech hearings and House antitrust report spotlighted monopoly abuses at Amazon, Google, and other tech giants, the report from ILSR makes clear that America’s monopoly problem has spread into many other sectors of the economy — including the electricity sector.
The report is the latest in a series from ILSR focused on fighting monopoly power throughout several sectors of our economy, including Banking, Broadband, Food and Farming, Pharmacy, Waste and Recycling, and Small Business.
The report explores how corporate concentration in the energy and electricity sectors is a serious problem that impacts nearly all Americans and contributes to a range of economic and environmental burdens.
Americans collectively spend $360 billion per year on electricity, with the vast majority of those dollars going to a small number of corporate utilities that control how America’s electricity is generated, transmitted, and distributed.
As the report makes clear, the structure of today’s electricity market stands in the way of progress in providing Americans with clean, safe, and cost-effective electricity we need to combat climate change — and, unfortunately, the problem is only getting worse. Over the last two decades, mergers have placed unprecedented economic and political power in the hands of a small number of corporate electricity companies — resulting in bloated returns for shareholders and underinvestment in energy efficiency, renewable energy, and resilient energy systems for the rest of us
Called “How Big Utilities Are Impeding Clean Energy, and What We Can Do About It,” the report does more than explore the problem of monopoly control of the energy sector — it also explains how we got here, and how we can address the problem. It lays out three key principles that could stop the power grab of electric utilities and help build a cleaner, more efficient, and affordable electricity system:
- Democratize control of the electricity system by giving individuals and communities more power to produce their own energy.
- Free the grid from the grip of monopoly utilities so the wires can act as a common market for entrepreneurs to provide services to meet the grid’s needs more efficiently.
- Shrink the economic and political power of investor-owned utility companies, so that people and planet come before shareholder returns.
As the U.S. faces intersecting crises — particularly
climate change and racial and economic inequality
— concentrated power in the electricity sector
obstructs progress in providing Americans with clean, safe,
and cost-effective electricity. While this can be true of any
type of electric utility, including public and cooperatives,
corporate utilities provide a particular brand of problems.
For two decades, mergers in the corporate electricity sector
have concentrated economic and political power in the
hands of fewer companies that favor bloated returns for
their shareholders over delivering for their customers and
communities. Corporate utilities increasingly control how
electricity is generated, transmitted, and distributed or sold
to the customer — resulting in both a lack of safety measures
as well as costly, short-sided, and dirty energy investments.
This affects all of us as we confront our climate crisis and
disproportionately harms the communities of color and lowincome households that live near dirty power plants and
within warmer inner cities.1
The solution to concentration lies in embracing the
decentralized ownership and generation of electricity. Even
as utilities have concentrated their power, the means to
generate electric power has dispersed. Acting individually
or collectively, Americans have a new opportunity to bypass
concentrated power and build wealth by using local solar
energy to power our lives.
The Economic Power of
Electric Power
Understanding how economic and political power functions
in the electricity sector first requires understanding the
market’s basic makeup. Three types of utilities serve U.S.
electricity customers: investor-owned utilities, public power,
and cooperatives. About one in seven Americans get
power from a government-owned utility, like a municipal
department. One in eight receive power from a rural electric
cooperative, serving primarily rural areas, as the name
suggests. Approximately two-thirds receive service from an
investor-owned utility in an urban or suburban setting.2
Despite different ownership structures, customers of public
and cooperative utilities often suffer from similar profitincentive and concentrated power issues that structure
corporate utilities and raise electricity prices. Over the last
several decades, few utilities of any form developed costsaving efficiency programs until compelled to by state
government. Investor-owned utilities see reducing energy
sales as a conflict for shareholders, but cooperative and
publicly owned utilities aren’t immune to these types of
incentive issues. Cooperatives are often reluctant to deliver
energy efficiency because it reduces revenue. Municipally
owned utilities provide revenue to their city’s general fund, so
energy efficiency can threaten their support for city budgets.
The financial incentives of cooperatives and municipal
utilities also distort clean energy markets. In the mid1900s, many local utilities banded together to form giant
power agencies to build and operate big power plants
or even coal mines. To finance these investments, the
new conglomerated power agencies locked their smaller
member utilities into long-term contracts — some as long as
70 years — limiting local flexibility in accessing clean energy
market. In Western states, the big electricity generation and
transmission cooperative, Tri State, has limited the ability
of smaller co-ops to procure cheap, clean energy as an
alternative to Tri State’s increasingly expensive coal-fired
energy. In the Southeast, the Tennessee Valley Authority
has pushed new 20-year contracts on its members after it
privately studied the market and found its own power was no
longer competitive. In Minnesota, rural electric cooperatives
used their local political connections to prevent state clean
energy laws from applying to cooperatives.3
While the movement toward concentrated power and
ownership in the electricity sector has affected all three types
of utilities, the effect on consumer costs and innovation is
America’s Monopoly Problem: Electricity 3 WWW.ILSR.ORG
most dramatic in the investor-owned utility business. In the
past twenty years, several large utilities have become giants
by acquiring captive utility customers from other regulated
utilities as well as skirting energy regulations.4 The customer
base and revenue of American Electric Power, Duke Energy,
and Exelon have grown by 50 percent or more since 2002.5
This market growth drives up prices for customers and makes
utilities less flexible in developing clean energy innovation.
For example, one of the country’s largest investor-owned
utilities, Exelon, has nearly doubled in size in the past
two decades, and now serves almost 9 million customers
across five states. Using its market power, Exelon withheld
power plants from a power auction in order to inflate prices
consumers would pay for electricity from its nuclear power
plants. On the East Coast, the company gobbled up the
electric utility serving customers in Washington, D.C., earning
a $1.1 billion payday for shareholders while promising just
$100 million in customer benefits. The utility cleared its
last barrier to this merger in front of the D.C. Public Service
Commission shortly after making a $25 million contribution
to a local soccer stadium, a pet project of the D.C. mayor.6
Exelon is not alone in stiffing customers to reward
shareholders — or leveraging its political might. Monopoly
utilities across the country, but particularly in the Midwest,
have used their captive customers (and often captive
regulators) to manipulate wholesale energy markets.
The Union of Concerned Scientists reports that utility
customers pay as much as $1 billion per year more for
electricity because monopoly utilities are allowed to “self
schedule” their power plants, essentially cutting in line in
front of competitors.7 They lose money in this move in the
competitive market, but they recover the difference (and a
profit) from their captive customers.
In Kansas, Westar customers have had to absorb rising
electricity prices even as the utility builds low-cost wind
turbines that lift shareholder profits. In Minnesota, Xcel
Energy used its lobbying muscle to win legislation approving
an expensive gas plant, evading oversight from public
regulators. In Virginia, the lobbying might of Dominion
Energy won legislation that allowed its shareholders to
double-dip, collecting profits twice on the same dollar spent
on the grid and making it harder for regulators to require
the monopoly utility to return excess profits to customers.8
Corporate monopoly power also diminishes public safety.
The concentrated power of all forms of utilities — investorowned, public, and cooperative — gives them enormous
political influence that can undermine measures put in
place to protect the public interest. However, publicly
owned and cooperative utilities have built-in safeguards,
such as elected government or boards allowing customers
to change the utility’s direction. Customers are particularly
at risk from investor-owned utilities that can use their
captive market and growing size to fend off oversight and
to increase shareholder profits at the public’s expense. The
most notorious example is PG&E’s culpability in some of
California’s recent wildfires. After raising customer rates,
PG&E failed to improve powerline safety, instead opting to
pay off shareholders.
If regulators were to effectively
curtail excessive corporate power
in the electricity business, we could
democratize the electricity system,
and structure it to prioritize local,
clean energy sources owned and
operated by communities.
Investor-owned utilities also lack incentives to invest in wind
and solar energy. Since the first power plants came online,
utilities had been given free rein to dump the pollution from
power generation into the air and water. Utilities that weren’t
compelled by law to adopt clean energy did not, because
the health costs of pollution didn’t show up on the utility
balance sheet. When utilities were compelled to buy clean
energy resources, they signed agreements to buy power
from third parties to avoid the risk of the newer technologies.
In recent years, however, investor-owned utilities have
changed their attitude toward clean energy — though they
haven’t changed their minds about using their market
power to unfairly garner profits. MidAmerican Energy, in the
Midwest, succeeded in getting its state regulators to okay
building wind energy projects that would produce more
energy than its own customers needed. Independent power
producers sued, claiming that MidAmerican used its captive
customers to finance power generation that would be sold
into competitive markets.9 They were right, but the Iowa
Supreme Court failed to stop the project and MidAmerican
would earn a nearly 12 percent return on its investment.10
America’s Monopoly Problem: Electricity 4 WWW.ILSR.ORG
The power of electric utility companies is even more
transparent in a market where small-scale options to
generate power — also known as “distributed energy” — have
fundamentally upended the relationship between utilities
and customers. Rooftop solar, batteries, electric vehicles,
and many other technologies have miniaturized the
functions of the grid system, allowing customers to produce
their own power or to buy directly from third parties. But
the wires that could allow customers to transact with each
other for power remain in monopoly hands. In California
alone, over 700,000 customers produce solar electricity
from their rooftops, enough to meet nearly 15 percent of
the grid’s peak energy needs.11 But the only way they can
bring this power to market is to sell back the power to the
monopoly utility, typically an investor-owned company
whose financial interest is in opposition to customer-owned
power generation.
If regulators were to effectively curtail excessive corporate
power in the electricity business, we could democratize the
electricity system, and structure it to prioritize local, clean
energy sources owned and operated by communities. The
community solar array on the Monadnock Food Co-op is a
perfect example. State laws allow the solar project (on the
co-op’s roof) to sell power directly to this local, cooperative
institution while generating revenue for local investors.12 It
could also include solar on individual home rooftops, on
schools and community centers, on hardware stores and
libraries, perhaps combined with energy storage to operate
when the grid goes down.
How Grid Policy Created and
Protects Electricity Monopolies
The problems of today’s electricity market power structure
have their roots in the electricity grid’s development. In
the early twentieth century, electricity production and
distribution was a Wild West. Cities might be served by
multiple competing electric light companies, stringing
multiple sets of wires to the same building. The leading
companies sensed an opportunity to sell elected officials on
a more orderly process for electrifying America. In exchange
for monopolies with public oversight, these utilities
promised to deliver affordable electricity.
This is the key issue: states granted utilities an exemption
from competition on the assumption that electricity was
delivered most efficiently by a single entity, a “natural
monopoly.” Thus, states expressly gave up an interest in
maintaining competitive markets. As a result, monopoly
electric utilities have been protected from antitrust scrutiny
under the “State Action Doctrine.”13 As long as states have
taken express action to allow markets without competition,
federal antitrust authorities cannot intervene.
Utilities have also lobbied for laws
to undercut competition from their
own customers.
Until the 1960s, the policies worked as designed. While
pollution remained unaccounted for, and communities
of color often felt the worst impacts of extracting and
combusting coal, uranium, or other power plant fuel, utilities
were profitable and electricity costs fell.
The cozy monopoly system, however, blew up in the face
of two major changes. First, technical and engineering
limits meant utilities were no longer able to extract cheaper
electricity from ever-larger power plants. At the same time,
the energy crisis of the 1970s ushered in high inflation,
exploding utility balance sheets during a period of massive
capital investment in coal and nuclear power plants.
The government’s response to these changes was a missed
opportunity to fundamentally reevaluate monopoly market
structure in the electricity industry. While the federal
America’s Monopoly Problem: Electricity 5 WWW.ILSR.ORG
government passed the first electricity market competition
legislation, the Public Utilities Regulatory Policy Act of 1978,
state legislatures failed to fully implement the law even
as they strengthened public oversight over power plant
construction. These limited changes bought another two
decades of relative stability in electricity markets but they
failed to address the underlying tension: that the financial
interests of monopoly utilities had diverged from the
public interest.
In recent years, states have withdrawn many monopoly
protections in the electricity sector, yet the patchwork
approach has often exacerbated monopoly power.
Policy changes in the 1990s opened wholesale electricity
markets to competition, requiring utilities to open their
transmission infrastructure to competitive access at fair
prices. Retail markets were also opened in some states.
But this has allowed conglomerates to operate power
plants in competitive markets and enjoy monopoly
protections in others, with problematic results. In Ohio, for
example, the financial strength of subsidiaries with captive
customers helped investor-owned utilities underwrite a
political campaign to bail out unprofitable power plants in
supposedly competitive markets.14
Utilities have also lobbied for laws to undercut competition
from their own customers. A number of utilities have shifted
how they bill for electricity, increasing unavoidable fixed
charges, and, by doing so, lessening the incentive for
customers to install solar or energy efficiency improvements.
In Kentucky and Louisiana, utilities recently succeeded in
ending net metering, the most widespread and effective
policy to encourage rooftop solar. Utility lobbying in
Nevada and Maine also succeeded in undoing net metering
and sharply curtailing the rooftop solar market, but in both
states public outcry led to at least partial reinstatement. In
Minnesota, cooperative and municipal utilities succeeded in
passing a law to add fees to the bills of customers with solar
energy, severely limiting the financial benefits for customers
installing solar.15
The Broader Impacts
Americans collectively spend $360 billion per year on
electricity. For a century, this money has flowed out of
our communities to support fossil fuel extraction and
utility shareholders while the pollution impacts have been
unequally distributed onto communities of color and lowincome people. This money has also supported a system
that underinvests in energy efficiency, renewable energy,
and resilient energy systems. Meanwhile, deconcentrating
economic and political power in the electricity sector could
address economic, resilience, environmental, and equity
needs long overlooked.
First, democratized, community-based electricity systems
can build local wealth by transferring money currently
spent paying electricity companies into local pockets. For
example, every megawatt of solar owned locally generates
$3 million in electricity savings for the owner or participant.
These projects also generate economic activity, supporting
electricians and installers. Local solar companies, in turn,
support other local businesses, keeping dollars circulating
in the local economy.
Community-based electricity
systems provide an opportunity
to address historical inequality in
electricity markets. People of color
disproportionately live near coal
plants and other polluting grid
infrastructure.
Community-based electricity systems also reduce grid
electricity costs by offsetting demand otherwise fulfilled
by large, centralized (and often polluting power plants). In
Minnesota, for example, state policy officially recognizes
eight types of cost savings provided by distributed solar
projects. At least two of these categories stem from
community-based projects.16
In addition, these decentralized systems make the electricity
system more resilient to natural and human disasters. In
Puerto Rico, for example, the aftermath of Hurricane Maria
has led to thousands of community-based solar energy
projects with battery storage, allowing networks of homes
and community centers to remain online should the island
suffer another of its frequent blackouts.17
Decentralized systems also reduce pollution because
communities tend to favor power production that doesn’t
subject them to health and environmental harm. When the
America’s Monopoly Problem: Electricity 6 WWW.ILSR.ORG
cooperative utility serving the small community of Kodiak,
Alaska needed to expand power generation, it switched
from diesel generators to wind and solar, backed up with
hydro power and batteries. This new system has lowered
their pollution and electricity costs.18
Finally, community-based electricity systems provide an
opportunity to address historical inequality in electricity
markets. People of color disproportionately live near
coal plants and other polluting grid infrastructure. Due to
historical and explicit discrimination, they also have less
wealth and income than other communities. Communitybased electricity systems, like the Shiloh Temple community
solar project in Minnesota, can provide clean power in
communities of color, provide electricity bill savings to
participants, and can provide a pathway into the clean
energy workforce for members of the community.19
Building Local Power
Stopping the power grab of electric utilities to build a
cleaner, more efficient, and affordable system should rely
on three key principles:
• Democratize control of the electricity system by giving
individuals and communities more power to produce
their own energy.
• Free the grid from the grip of monopoly utilities so the
wires can act as a common market for entrepreneurs to
provide services to meet the grid’s needs more efficiently.
• Shrink the economic and political power of investorowned utility companies, so that people and planet come
before shareholder returns.
Stronger state policy and increased oversight by state
regulators and enforcement officers, including public utility
commissioners and state attorneys general, are needed to
check the political power of these companies. Breaking up
and reining in the influence of massive, monopoly electric
utilities — and returning decision-making power back to the
local level — would level the playing field for decentralized
energy systems that produce myriad economic, social, and
environmental benefits.
Collect Data and Define Marginalized
Communities
State legislatures can more effectively address the economic
and environmental impact of concentration and monopoly
if the state has an official measure, such as CalEnviroScreen
in California, to define marginalized communities. These
databases (and maps) examine racial, economic, and financial
data in combination with environmental impacts to identify
communities most harmed by fossil fuel companies and
markets. They also provide states a method for addressing
these harms by defining the most burdened communities, to
be targets of state programs to alleviate these burdens.
Publicly Oppose Mergers or Lobbying Efforts
States can play a significant role in reducing the market power
of utility companies by opposing utility mergers. Governors,
state attorneys general, and state regulators can all use their
platform to oppose mergers that don’t match customer
benefits with shareholder benefits. In addition, all public
officials can and should call out utility lobbying efforts that
circumvent established regulatory compacts, such as when
Xcel Energy lobbied for a law circumventing Public Utilities
Commission oversight of their proposed gas plant in 2017.20
The Federal Energy Regulatory Commission should adopt a
stance of opposing utility mergers by default, unless:
• The merger provides greater benefits for customers than
for utility shareholders.
• It sets conditions to mitigate the increased ability of the
merged utility to legislatively secure favorable treatment
for its shareholders at the expense of its captive customers.
• It draws bright lines between affiliates and subsidiaries
of merging utilities to avoid favorable treatment at the
expense of captive customers, including purchasing
power from affiliate-owned power plants, using hedges
or other financial instruments offered by affiliates, or any
other financial relationship that could disproportionately
benefit the merging companies compared to customers.
America’s Monopoly Problem: Electricity 7 WWW.ILSR.ORG
Prevent Conflicts of Interest
State legislators and city officials can prevent conflicts of
interest by refusing campaign contributions from utility
executives or political action committees. For example, in
Virginia, numerous legislative candidates won state house
races on a pledge to refuse money from monopoly regulated
utility Dominion Energy. In 2019, the Democratic Party of
Virginia also took the pledge. Additionally, to prevent a cozy
relationship, states should adopt policies to prohibit the
“revolving door” by prohibiting utility employees to serve on
regulatory commissions that oversee their former employer.21
Elect or Appoint Public Champions to Utility
Commissions
Utility commissioners play a fundamental role in monitoring
competition in electricity markets. Governors and voters
should ensure that utility commission candidates both
understand their role protecting the public interest and
will address issues related to the concentrated power of
investor-owned utilities in the energy sector.
Enable Fair Access to Renewable Energy
Financing
State regulators or legislators should require utilities to offer
inclusive energy financing using the Pay As You Save model.
These policies allow utilities or banks to issue upfront
payments for on-site energy efficiency and renewable
energy improvements (everything from insulation to
rooftop solar), as done by the Ouachita Electric in Arkansas,
that customers can repay over time through the utility bill
using the money saved from lower energy bills.22 Because
repayment is collected via the utility bill and, therefore, tied
to a meter rather than an individual customer, it allows those
with poor credit or minimal savings to reduce their energy
costs and reduce demand on the electric and gas systems.
Ensure and Enforce Fair Compensation and
Rate-Making Standards
Utilities typically want to minimize competition to their market
share by providing the lowest possible compensation for
customer-sited or -owned energy generation. Often, they
suggest paying wholesale energy price, even for energy
delivered to retail customers. With numerous transformative
technologies giving customers more choice in how they use
or generate electricity, state regulatory commissioners should
ensure that the prices and pricing schedules for community
solar, electric vehicles, and other distributed energy resources
are fair for customers. Good examples include Minnesota’s
“value of solar” and community solar programs.23
Further, state legislatures and state regulatory commissions
must ensure fair compensation and interconnection rules
for distributed energy. For example, states should use
net metering or a fair value of solar payment for on-site
renewable energy generation, or allow customers to transact
with one another. Minnesota’s value of solar, for example,
includes calculations of how distributed energy avoids fuel
costs, operations and maintenance, offsets other power
capacity, and pollutes less.24
Broaden Data Access and Ensure and Enforce
Transparency
Customer usage data are an important tool for fostering
transparency of utilities and encouraging more
entrepreneurial solutions to grid needs. However, there are
currently several loopholes that allow publicly regulated
monopoly utilities to keep data used in energy decisionmaking from customers and the public. States can eliminate
these loopholes by requiring utilities to comply with the
Green Button Standard, a federally approved standardized
energy use format that provides simple access to customers
and third parties they choose to work with. Lawmakers
can also require utilities to publicly disclose anonymized,
distribution-level energy use data to encourage more
innovative solutions to grid needs, as community-choice
entities have provided in California.25
Increase Scrutiny of High-Voltage Transmission
Line Development and Require “Non-Wires”
Alternatives Analysis
Congress or the Federal Energy Regulatory Commission
(FERC) should amend FERC Order 1000 to require an
independent analysis of all feasible non-transmission
alternatives to proposed regional transmission lines, prohibit
cost recovery for transmission projects where no reasonable
investigation of alternatives took place, and develop a
regional cost-sharing approach for non-transmission
solutions that aligns with cost-sharing allocations for
transmission projects.
High-voltage transmission lines cost millions per mile of line,
involve the taking of private property, and can cost far more
than alternatives to deliver similar capacity and energy. As
a prerequisite to approving any segment of a multi-state
electric transmission project, state laws should require an
independent analysis of non-wires alternatives — including
conservation, energy efficiency, distributed energy, energy
storage, etc. — to deliver the same energy, capacity, and
reliability benefits.26
America’s Monopoly Problem: Electricity 8 WWW.ILSR.ORG
One approach for states would be to create an independent
agency to review infrastructure projects costlier than $2
million, including transmission, power plants, substation
upgrades, etc. The proposed Distributed Energy Resources
Authority in Washington, D.C., would prevent conflicts of
interest in grid infrastructure decisions (where utilities that
decide also profit by favoring capital expenditures) by
creating an independent authority to review them.27 When
used to evaluate transmission projects, the same geographic
bounds should be used for “non-wires” projects.
Give Customers, Individually and Collectively,
More Choices
Consolidation in the electricity sector has left consumers
with limited options for choosing cost-effective and clean
electricity sources. State legislatures can provide more
choices in a few ways.
They can create community renewable energy programs
by enacting laws that allow customers to buy into wind and
solar projects that are not on their property and can be
owned by non-utility entities. In Minnesota, community solar
projects produce electricity enough to power over 100,000
homes each year, provide $1.2 billion in financial benefits to
subscribers over 20 years, and save all customers money.28
States can also enact a community-choice aggregation
policy. Adopted in nine states, this law allows communities
to take over electricity purchase decision making and adopt
cost-effective renewable energy, advance energy efficiency,
and encourage local energy generation and economic
development. The East Bay Community Energy program
has set aside over $5 million in its first year for a Local
Development Business Plan to target clean energy resources
and jobs to communities of color and low-income residents.29
Directly Support Distributed
Renewable Energy
Without policy intervention, utilities will default to building
large-scale wind and solar projects that primarily benefit
shareholders rather than constructing community-based
renewable energy projects that broaden economic and
financial benefits to all. States can and have adopted
renewable energy laws that require specific investments in
distributed energy. In Maryland, the state requirement for
50 percent renewable energy standard also requires about
one-third of the energy procured (14.5 percent) to come
from solar. In a useful twist, compliance payments for utilities
missing the targets will specifically support solar projects
that directly benefit or are owned by low-income residents.30
Further, state legislatures and state regulatory commissions
must ensure fair compensation and interconnection rules
for distributed energy. For example, states should use
net metering or a fair value of solar payment for on-site
renewable energy generation, or allow customers to transact
with one another. Minnesota’s value of solar, for example,
includes calculations of how distributed energy avoids fuel
costs, operations and maintenance, offsets other power
capacity, and pollutes less.31
Direct Energy-Related Public Resources
Toward Distributed Energy
When states spend public money to encourage clean
energy, they should focus on public goods underserved
by existing markets, such as customer and community
ownership, power generation located close to demand and
with storage to provide disaster resiliency and prioritize
investments in communities of color and low-income
communities.
Notes
- “When Utility Gas Affiliates Play by Monopoly Rules, Consumers Are
Likely to Lose,” David Littell, Regulatory Assistance Project, April 2018. - “Electricity explained,” Energy Information Administration, January
2020. - “TVA Attempts to Chain Local Power Companies to Longer Contracts
in Effort to Prevent Defection Risk,” Joe Smyth, Energy and Policy
Institute, September 2019; “Electric Co-ops in Colorado push for
change at Tri-State G&T,” Joe Smyth, Clean Cooperative, March
2019; “Local Utilities Have Lost Local Control,” John Farrell, Institute
for Local Self-Reliance, June 2016; “Minnesota solar energy mandate
closer to becoming law,” Pioneer Press, May 2013. - When some state electricity markets were deregulated in the early
2000s, many electric utilities created subsidiaries to participate in
new, competitive power generation markets. For example, Florida
Power & Light (FPL), a state-regulated company in Florida, created
FPL Energy to invest in developing wind power projects in the
Midwest. Exelon, discussed later, is a holding company consisting of
several state-regulated monopolies as well as multiple unregulated
power generation subsidiaries that sell electricity from nuclear and
other power plants in competitive markets. - “Mergers and Monopoly: How Concentration Changes the Electricity
Business,” John Farrell, Institute for Local Self-Reliance, October 2017. - “Windfall for Exelon plants weakens case for Illinois ‘bailout.’,” Energy
News Network, September 2015; “Mergers and Monopoly: How
Concentration Changes the Electricity Business,” John Farrell,
Institute for Local Self-Reliance, October 2017. - “Used, But How Useful? How Electric Utilities Exploit Loopholes,
Forcing Customers to Bail Out Uneconomic Coal-Fired Power Plants,”
Union of Concerned Scientists, May 2020. - “Westar and KCP&L Say Coal Pushed Up Kansas Electric Rates,
But Investments Will Pay Off Soon,” Brian Grimmett, KCUR, April
2019; “Monopoly Un-Managed? Utility Tries to Dodge Oversight
of Spendy Proposed Gas Plant,” Karlee Weinmann, Institute for
Local Self-Reliance, January 2017; “Commentary: Trying To Curtail
‘Double-Dipping’ at Dominion Energy,” Adam P. Ebbin, Connection
Newspapers, February 2018. - “MidAmerican Energy and NextEra Square Off Over Wind,” David
Wegman, Renewable Energy World, September 2009. - “NextEra’s legal challenge to big MidAmerican wind project rejected,”
David DeWitte, The Gazette, June 2012. - “Reverse Power Flow: How Solar+ Batteries Shift Electric Grid
Decision Making from Utilities to Consumers,” John Farrell, Institute
for Local Self-Reliance, July 2018. - “Pioneering community solar in the granite state -Episode 44 of Local
Energy Rules Podcast,” Karlee Weinman, Institute for Local SelfReliance, May 2017. - Schwarz, Jeffery D. “The Use of the Antitrust State Action Doctrine
in the Deregulated Electric Utility Industry.” American University Law
Review 48, no.6 (August, 1999): 1449-1490. - “Ohio’s @firstenergycorp will reap a $150 million per year bailout from
HB6,” John Farrell, Twitter, July 2019.
- “As Conservation Cuts Electricity Use, Utilities Turn to Fees,” Rebecca
Smith, Wall Street Journal, October 2015; “Kentucky rolls back net
metering, bucking recent pro-solar trend elsewhere,” Catherine
Morehouse, Utility Dive, March 2019; “La. Kills net metering. Will
other states roll back solar?,” Edward Klump, E&E News, October
2019; “As Rooftop Solar Grows, What Should the Future of Net
Metering Look Like?,” Dean Gearino, Inside Climate News, June 2019;
“Nevada PUC Approves Net Metering Rules Expected to Reboot the
State’s Rooftop Solar Industry,” Julia Pyper, Green Technology Media,
September 2017. - “Report: Minnesota’s Value of Solar,” John Farrell, Institute for Local
Self-Reliance, April 2014. - “Puerto Rico: The Forgotten Island,” Tim Johnson, Miami Herald,
September 2018. - “Kodiak has almost 100 percent renewable power. It took some sci-fi
tech to get there,” Rachel Waldholz, KTOO, September 2017. - “Community Solar With an Equity Lens: Generating Electricity and
Jobs in North Minneapolis,” Maria McCoy, Institute for Local SelfReliance, July 2018. - “Sherco power plant: The wrong project, for the wrong reason, at a
big cost,” John Farrell and Karlee Weinmann, Star Tribune, February
2017. - “Thirteen candidates who refused Dominion money win seats
in General Assembly,” Robert Zullo, Richmond Times-Dispatch,
November 2017; “Democratic Party of Virginia rejects political dollars
from Dominion,” Mel Leonore, Richmond Times-Dispatch, September
2019; “PUC critics cite concerns over ‘revolving door’,”George Avalos,
The Mercury News, March 2015. - “Energy Research Hot Spot: Inclusive Financing,” Institute for Local
Self-Reliance; “Performance of Inclusive Financing for Energy
Efficiency: Preliminary Results of the Ouachita Electric HELP PAYS
Program,” Ouachita Electric Cooperative, September 2016. - John Farrell, April 2014; “Why Minnesota’s Community Solar Program
is the Best,” John Farrell, Institute for Local Self-Reliance, May 2020. - Op. cit. John Farrell, April 2014.
- “Distributed Resource Adequacy Capacity Request for Proposal (RFP),”
East Bay Community Energy, Peninsula Clean Energy,Silicon Valley
Clean Energy & Silicon Valley Power, November 2019. - Ibid.
- “Solar Co-ops Support Clean Energy Advances in D.C. — Episode 64
of Local Energy Rules Podcast,” John Farrell, Institute for Local SelfReliance, November 2018. - “Minnesota Community Solar Saves All Utility Customers Money,”
John Farrell, Institute for Local Self-Reliance, May 2019; “Why
Does One Minnesota Utility Have a Love / Hate Relationship with
Community Solar?,” John Farrell, Institute for Local Self-Reliance,
April 2019. - Community Choice Energy: An Alternative to Electricity Monopolies
Enables Communities to Center People and Planet,” Institute for Local - Self-Reliance, February 2020.
- “How Can Your State Get an “A” Community Power Score?,” Institute
for Local Self-Reliance, February 2020. - Op. cit. John Farrell, April 2014.
