Here are some of the factors that are begining to create cracks in the distribution monopoly that the utility companies currently hold… However, innovation and shifts in the global economy are forcing their hand sooner rather than later. unfortunately they seem to be exploiting their customers for their lack of innovation rather than working cooperatively with the emergent system.
John Farrell | Renewable Energy World
‘It seems crazy that electric companies would have anything against customers that spend their own money to reduce their energy use with clean, local solar power. But any number of utilities are slapping excessive fees and charges on customers with solar to slow or stop them. Here’s 5 reasons why…
1. Utilities Don’t View Customer-Owned Solar Power as a Resource
Most utilities see a solar array on a customer rooftop the same as they see an energy efficient refrigerator. It means the customer buys less electricity.
2. The Utility Business Model Seems Broken
For most investor-owned (for profit) utilities in particular, this new data can’t be squared with their old business model. In a study by the Lawrence Berkeley Laboratory, researchers found that the ratepayer impact of lots of customer-owned solar is quite small, but the larger impact falls on utility shareholders. Solar may mean modest revenue reductions for electric utilities, but by offsetting the need for new, large-scale power plants, solar’s real threat is in choking off the for-profit utility’s source of shareholder returns.
3. It Seems Easier to Fight Than Innovate
In a competitive business it would seem mad to fight your own customers, but most utilities aren’t in competition (even in states where there is competition in selling electricity to ultimate customers, the ownership of the distribution grid remains a monopoly). That means there are only a few prominent examples of utilities—such as Green Mountain Power and Farmers Electric Cooperative—working to change yesterday’s business model to accommodate today’s technology.
4. The Electricity System is Fundamentally Changing
t’s easy to pick on electric companies for overlooking the value of their customer’s energy (and for lashing out with retrograde policies), but it’s not entirely their fault. The 100-year-old rules of the electricity system—written by legislatures and governed by public regulatory commissions…
In an era of incremental change where stability was prized over innovation, this monopoly was largely in the public interest.
Today, we can generate power on rooftops or farm fields, manage it in real-time with smart thermostats or appliances, and control it remotely with smartphone apps and automation software. In this environment, do we need a traditional, top-down electric utility?
Most utilities won’t change by themselves, however. The inertia and cultural stagnation of monopoly make them much better at playing defense than offense. That has regulators in at least one state, New York, saying “no.”
5. Electric Utilities Use Enormous Power to Resist
Imagine how typewriter companies felt upon the introduction of personal computers, how landline phone companies felt a decade ago. Electric utility executives are in a similar position, locked in an outdated paradigm and without a strategy for reaching a different future.
The key difference is that electric companies wield enormous market and political power over their system.
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