The following is a contributed article by John Farrell, a co-director of the Institute for Local Self-Reliance and director of the Energy Democracy Initiative.
Solar company Sunnova wants to give new homeowners an alternative to electric utilities like Pacific Gas and Electric, cracking open the door to competition with a combination of solar and batteries in a "microgrid." The proposal would end nearly a century of guaranteed monopoly for California utilities by letting other companies not just sell power but use an alternative delivery system to the utility's platform. Regulators shouldn't just let them through this opening, they should take the door off its hinges.
Numerous companies and homeowners are proving the upside of broadening grid access. OhmConnect, Tesla, and other companies are providing hundreds of megawatts of electricity capacity, forestalling rolling blackouts in California. Community solar developers in Minnesota have installed over 800 megawatts of solar projects that are reducing energy bills for over 12,000 households and hundreds of businesses. More than 1 in 4 Hawaiian households have spent their own money to add electricity capacity, reducing the island state's reliance on imported fuel oil.
Everywhere these entrepreneurs turn, however, they're being blocked by the incumbent utility that wields its monopoly platform as a weapon. Allowing this abuse of power threatens grid reliability, affordable electricity and our democracy.
On the high-voltage interstate transmission system, for example, the responsible federal agency has flagged that investor-owned electric utilities have "transmission dominance," shorthand for the ability to bully competitors to get their way. A perfect illustration is when a competitive new energy transmission line could have brought millions of dollars in potential cost savings to regional grid customers in Louisiana. Rather than customers realizing these savings, the Louisiana utility Entergy blocked the transmission line by building a gas plant in its path. This move not only blocked these captive customers from cost savings but will also force them into years of additional spending on natural gas in the long run.
In Minnesota, one of just 16 states to allow community solar project development, incumbent utility Xcel Energy was fined by regulators for slow-walking interconnection of community solar projects. The $1 million fine, nearly unprecedented, could barely be called a slap on the wrist as it only represents 0.007143% of the company's annual revenue. In contrast, if the company could have successfully built the 800 megawatts of new solar capacity itself, its shareholders would have netted nearly $160 million. Slowing interconnection for a minimal penalty has big potential financial returns.
Utilities also routinely defy the expectation that their shield from competition comes with government regulatory oversight. In Arizona, the three largest investor-owned utilities have 107 lobbyists, more than one for each of the state's 90 legislators. In Ohio, FirstEnergy bribed the House Speaker to win passage of legislation providing billions of dollars in subsidies for un-competitive power plants. Florida Power and Light has been connected to the financing of deceptive ballot initiatives and even fake candidates, all in the name of protecting its monopoly system from competitors.
Preserving electric utility monopolies is too costly to consumers, entrepreneurs, and to democracy. Every state, not just Texas and California, should allow businesses to group customers together and get them paid to reduce energy demand when grids are stressed. Every state, not just 16 of them, should allow customers to participate in community solar projects if they don't own a sunny rooftop. Every state should make it easy for customers to share their own electricity use data with businesses that want to help them manage their energy costs.
The U.S. House recently passed legislation to control the power of tech platform monopolies over our economy, citing the high cost of these digital gatekeepers. Amazon, for example, uses its monopoly platform to squeeze sellers with high fees, to steal their product ideas, and to favor its own products. Electric utilities, managers of the electricity grid, are no different in their ability to abuse power, except that they are granted their monopoly power explicitly by the government.
One hundred years ago, our leaders compromised their belief in free enterprise in the hope that public oversight would be able to check the worst behavior of electric utilities. To get the grid built might have been worth the tradeoff, but a perpetual platform monopoly over the grid carries too high a price. With Amazon and Facebook, we have recognized that when a platform owner has monopoly power, it can exercise that power to threaten our economy and our democracy. Sunnova has asked regulators to crack open the door to a $360 billion per year market to provide electricity customers with a choice. Don't waste this chance. Break the monopoly and rip off the door.