Category Archives: Business-Politics

Disturbing Questions about Energy

Alternative energy subsidies have been with us for a while, but few people have really thought through what happens down the road in say, 2020 when government subsidies have paid for the installation of enough systems so that 40% of the utility’s customers are trying to sell power back to the utility. This coupled with the cost of subsidies will create an equation that utility companies will not view cheerfully. They may no longer want to pay for this power from customers.

Californians have seen this scenario before during drought years. Water companies, desperate for revenue to support the cost of reduced water delivery, found new ways to bill customers. For example, the San Francisco PUC (Water Company) cleverly decided to charge for water delivery and then charge for water pick-up by adding a wastewater charge. Some utilities just said that they had to raise prices to maintain current service, even though customers were conserving water at a 30 to 40% rate. In addition, they began detaching charges for infrastructure from customer usage—creating the enviable situation where “customers must pay whether they use water or not.” The day may be near when Power and water companies charge customers for the service, just like your cable provider. You pay monthly whether you use the service or not. I am definitely a solar power advocate, but whoa?

What is to keep electric utilities from following the same game plan? Even if we provide most of our own power, we can’t afford to just let them go broke because we need them to manage the power grid, if nothing else. No, we may be paying for all of the “free” solar power for many years. The solar cost tables that are being used to sell solar installations today could soon have the same toxicity as the packaged loans of Lehman Brothers.

Power companies should be required to show their customers how each advance or plateau in power production—whether it is solar, natural gas, or other system—lowers the cost of power for customers, without the subsidies in place. The same cost-benefit calculation that they would have to provide if they were to add a new power generating plant run on natural gas, coal or nuclear fuel. Otherwise, the industry is not being accountable by providing all of the information necessary for the public or government to make alternative energy decisions.

Geoff Wood
5/31/2011