Utilities should join us in working toward a 21st century rate design
Solar, environmental and consumer advocates say utilities should aim for collaboration, not confrontation, on rate design
The following is a guest post from John Howat, senior energy analyst at the National Consumer Law Center, Rick Gilliam, program director at Vote Solar, and Samantha Williams, staff attorney at the Natural Resources Defense Council. If you are interested in submitting a guest post, please review these guidelines.
Electric utility rate design seems like a hot topic these days, and for good reason. How customers interact with the energy they use and how utilities finance their capital investments can be a complicated policy issue, but is so critical to powering America in a way that protects consumers and provides for the continued growth of clean, efficient and renewable energy. We think the fact that organizations from environmental, consumer and renewable energy perspectives – such as ours – are now working closely together on the issue speaks volumes about its importance, and signals the inclusive and collaborative path forward needed to get good rate design done right.
Of course our organizations don’t see eye to eye on everything. We are still working to find ways to design and implement policies, for example, that advance clean energy technologies in ways that allocate their costs and benefits equitably. But more and more these days we’re finding and forging common ground. One unfortunate trend we’ve fought against in the last year, and that we all agree would set back our shared goal of affordable and clean energy, is a persistent push by utilities across the country to impose ever-higher mandatory fixed fees on their customers’ monthly bills.
The decision to push back against high mandatory fixed fees was an easy one for all of us. We know that this backwards looking, blunt tool removes consumers’ control over their own electric bills, disproportionately impacts lower income households and those who use the least amount of energy, and removes incentives to pursue renewable and efficient energy options. We have also observed, repeatedly, that the utilities pushing for higher and higher fixed fees often lack sufficient or credible data to back up their claims and proposals.
Fortunately, most utility commissions agree. In more than two thirds of recent rate cases regulators have rejected or severely limited utility proposals to raise these mandatory fees ever higher. These are important decisions, because they create an opportunity for all stakeholders – utilities, regulators, legislators and advocates alike — to come together and set a new course moving forward. Locking in higher mandatory fixed fees today locks in the utility business models of the past, erects barriers to the benefits of new technologies and penalizes low use electricity consumers. It is time to look forward, not backwards.
As we’ve talked with one another over the last few years in regulatory cases across the country, the conversation increasingly turned to what good rate design should look like. In this less straightforward undertaking, we view our differences as an opportunity to learn from one another, solve problems and make sure that consumer interests and protections are front and center as our energy sector transitions away from polluting sources of power and seeks to fully realize the many benefits of clean, affordable and efficient energy.
We were very glad to see that the National Association of Regulatory Utility Commissioners (NARUC) recognizes the importance of a robust dialogue on rate design. The new staff subcommittee commissioned last November had its first session at the winter meetings in February, and regional meetings are expected to take up rate design topics in the months ahead.
We stand ready, willing and able to engage in this dialogue and ask our colleagues from across the spectrum to consider an expansive notion of what “good” looks like in rate design. It should include a good process; one that is transparent, fair, accessible and accountable. It should be based on good data that is credible and available to all parties. And it should have a good sense of timing. Instead of the traditional confrontation in a contested rate case proceeding, we should look for opportunities to engage collaboratively in formal, constructive stakeholder processes that explore new ways of moving forward together, even if it takes a little longer.
Individual states are grappling with the policy responses that can keep pace with rapidly changing technology and economics in electricity generation, distribution and consumption. During this critical period of transition, we urge policy makers to ensure that all stakeholders have a meaningful seat at the table, and that decision-making is based on transforming the current system into one that is cleaner, where costs and benefits are more equitably distributed, and where access to basic electricity service and the benefits of new technologies is affordable to all consumers.
We’ll all be learning as we go, of course, figuring out what works and what doesn’t, what’s real vs. what’s window-dressing, and who is looking toward the future. By continuing to collaborate across diverse perspectives, we can ensure that what we learn is well informed, broadly shared and driving toward good outcomes for everyone. This is where our organizations are finding common ground, and we encourage the utility industry to turn away from regressive rate design that keeps us locked in the past and join us in a forward-looking collaboration that works towards a clean, efficient and affordable energy future for everyone.