Do Bay Area residents benefit from PG&E's local energy domination?
Image by Drachenfaaat on Deviant Art
Heads up: PG&E is raising its rates yet again, a widely misliked move criticized by Sen. Scott Wiener among others. Meanwhile, nonprofit Environmental Working Group (EWG) questions the State's longstanding system that upholds “energy monopolies,” instead of fighting for more fiscally/environmentally efficient, pro-consumer policies.
California energy ratepayers are currently trapped in PG&E’s misguided operating plan that prioritizes investments that are designed to hike profits and reward shareholders. And the utility’s monopoly control over power means its customers have little means of escape.
The company, California’s largest investor-owned utility, uses its outsize political influence to ensure ratepayers pick up the tab for wildfire damages it has caused and the resulting liability. As part of its seemingly never-ending quest for money, PG&E further loads its coffers to protect profits, stock price and control of its electric system.
Electric monopolies should no longer be able to use their excessive influence to protect profits by increasing flat charges, which reduces incentives for customers to invest in rooftop solar and energy efficiency. Soaring charges undermine potential savings from those vital clean energy investments, ultimately increasing power costs while doing nothing to fight the climate crisis.
If PG&E is successful with the plan it has put before the CPUC, the solar industry will likely flee the state, and thousands of jobs lost…
The solution is to prioritize a decentralized power grid advocated by EWG that would consider ratepayer investments in solar and energy efficiency as benefits to the energy system, reward those ratepayers with cost savings, ban utilities from using customers’ money to pay for bad investment decisions or liability for wildfires and other catastrophes they cause, and rely on effective solutions to the climate emergency.
But unless California overhauls its power grid, PG&E will continue to have its way.
And that way is one which ensures the utility can exert its monopoly power to raise charges, prop up failing energy sources like natural gas and shift financial risks to customers.
Reframing ratemaking for the worse
A 2013 report from the Edison Electric Institute, or EEI, which represents investor-owned utilities, raised the alarm that utility profits were under threat from energy efficiency investments and customer-owned solar. Since then, PG&E and others have focused single-mindedly on reframing ratemaking principles to increase fixed customer charges.1
Until the mid-2000s, the utility industry profited from consistently increasing electric demand. This helped utilities justify overbuilding new power plants and infrastructure additions, and secured the companies’ steady revenue in the face of no competition.
But electric demand has remained essentially flat2 for the past 15 years, thanks to increasing efficiencies in lighting, heating, air conditioning, industrial motors and other technologies.
For the first time, the industry also began to face serious competition from customer-owned power generation, typically rooftop solar.3 Now the competition is heightened by customer-owned battery storage that ensures a reliable decentralized source of power.4
This article originally appeared in the Environmental Working Group website. Read the whole thing here.
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