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You are here: > News > July 22, 2015

Power Companies' objective: Remedy the unintended subsidy of solar customers by residential customers

Residential solar customers using net-metering, pay much less for their electricity; but they use the grid even more than regular residential customers, who end up picking up the infrastructure costs, which is a subsidy. Remedy: a low ~$4.25/month facilities charge for net-metering customers.

by Sterling D. Allan
Pure Energy Systems News

I've been invited by Coast to Coast AM to come on their show with George Knapp [soon; rescheduling in process]. (I referred them to my Keshe rebuttal for anyone who might be pushing back against my being on their show.) They said:

"We want to discuss solar energy and the attempt by power companies to crush rooftop throw up roadblocks to make it harder for homeowners to install rooftop. And how electric companies hate the idea of clean, plentiful solar taking away their business even though they produce so much of their product by burning coal thus polluting the air and making global warming worse."

I was ripe to accept this invitation, having had a conversation just a couple of days prior with a neighbor, Roy McGuyer, who building a garage with insulated concrete foam forms. He said he had considered Solar, but now with the utilities making it even more expensive to do solar, adding a fee to the bill, he wasn't sure. He is very interested in in the GAIA 5 kW system. Then he could be off grid, with no bill. That would be cool if the first US customer lived just down the road from me.

In the alternative world, especially in the exotic free energy world, power utility companies very often are depicted as bullies bent on polluting the planet and blocking any clean solutions that reduce their control, especially affordable free energy solutions. They are often depicted as public enemy number one in this sector.

I'm not going to deny that there may be some of that kind of stuff that goes on: power-company-lobby-paid trolls, bullies, and whackers. Most of the time, however, I would guess that the budget for such black ops doesn't come from power companies but from the global corporate controllers with money burning a hole in their pocket.

It is a true maxim that "New wine can't be put into old bottles." The status quo nearly always fights the new thing to come along. As we say at the bottom of each page of our PES sites: "All truth passes through three stages: first, it is ridiculed; second, it is violently opposed; and third, it is accepted as self-evident." -- Arthur Schopenhauer (1788-1860) And ""When you're one step ahead of the crowd you're a genius. When you're two steps ahead, you're a crackpot." -- Rabbi Shlomo Riskin (Feb. 1998)

Yesterday's heresy is today's dogma.

So, yes, power companies and governments (who tend to be one step behind, in the above metaphor) are going to play a role in this human drama of resisting new things. No doubt about it.

But you're going to see me coming to their defense in this article.

Before making a call to my local power company, PacificCorp (covers 6 states, with 1.8 million customers, providing 55 terawatt-hours in 2014), I thought I'd do just a little boning up on what is being said out in the Internet news along these lines that George Knapp wants to cover.

Indeed, it didn't take long so see a slew of articles that raise your hair on end. Here are some I looked through:


Years ago, I had a very informative conversation with Ted Olson, Professor of Mathematics and Physics at Snow College, here in Sanpete Valley. He was involved with UAMPS -- a Utah power conglomerate. I think he's the one who told me the very useful rule of thumb that a customer's "average usage" is 5% of their peak usage. He also informed me about some of the infrastructure issues that power companies face in providing power. They have to be big enough to handle peak load at the heaviest usage time during a year. Some power stations are easier to ramp up and down in their output than others. Nuclear plants, for example, take days to slow down; whereas a natural gas power plant can respond in minutes -- not seconds.

So I wasn't a novice when I finally placed a call to PacificCorp.

I spoke for over 40 minutes to Dave Eskelsen, Company Spokesman for Pacific Corp and Rocky Mountain Power.

He made some very excellent points that help us understand the power company's point of view here.

Obviously, he doesn't see the power company as being the bad guy, out to gouge the customers and pollute the planet.

Think of all the infrastructure that a power company has to maintain: generators, boilers, supply chain of fuel, transformers, high-power lines, substations, maintenance fleet, back-up systems and supplies, not to mention personnel. The power company has to build big enough to handle peak load of everyone on a cloudy, cold day.

Net Metering

If you're not familiar with this term, it is very simple. Net metering measures not just the incoming power to a facility, but also the outgoing from the facility, such as from a wind or solar source at the facility. At the end of the month, the power company takes an accounting of the incoming:outgoing and bills or pays accordingly. In Utah, they will credit extra from one month over to the next month, but will not send a check for that extra power generated by the customer.

When a solar power, net-metering, residential customer uses the grid, their net usage is negligible, hence the revenue from them is negligible, but their impact on the grid is even greater than the regular customer. Not only are they pulling electricity, but they are pushing it. They have to have systems in place (paid for by the customer) to protect the lineman working on the lines during grid outages so that they are not electrocuted by a renewable power customer. 

The solar customer is basically using the grid as their battery, saving them that expense (which is about half of the cost of an off-grid system). Someone has to pay for that infrastructure. And because the residential renewable net-metering user isn't paying for it, that comes from the other, non-renewable, non-net-metering customers. It is a subsidy covered by that customer base.

That is why a "facilities charge" makes sense for net-metering customers -- a flat monthly rate that they pay, to carry their weight for the infrastructure costs. It's not that much. PacificCorp proposed $4.25/month, but it hasn't been approved by the commission. Without such a charge, that cost is being carried by the balance of residential customers.

"It's not so that the power company get's more money," Eskelsen explained. "We have to provide power at a reasonable rate, by mandate. It's so that the other customers are not stuck with the charge for the net-metering customers who pay much less for their electricity."

"This is not a big problem now, in Utah, but it would be best if we solve it before the number and capacity increases. As we've seen in AZ and CA, this does produce problems that need to be dealt with. The subsidy issue is real."

Rate equality is a policy of the utility, by law, and net-metered customers not pulling their weight in covering facilities costs creates an imbalance in rate equality.

I asked if any surveys had been done of the general residential customer base. Maybe they don't mind helping out in the shift to more renewable power solutions. Eskelsen pointed out that this would require a legislative action to change the law to allow for rate inequality based on the customer base being okay with that. It is a form of socialism, I might point out.

If the citizens want to finance the move to cleaner energy, then they can encourage their legislators to enact laws that provide a subsidy to the power companies to cover the facilities costs being used by the renewable energy net-metering customers. But as the laws are presently written, the utilities' mandate is to have equitable pricing across their customer class.

He made the point that a utility company is a "natural monopoly," due to its exclusive power providing function and size. Due to economies of scale, they are able to do what they do at a relatively low cost to the customer. Think of how expensive -- and polluting -- it would be if each home or each neighborhood had to have its own power plant based on conventional fuel-based generation. 

Given that they are an acknowledged natural monopoly, governments play a very tight role in overseeing how that monopoly is run. Rate changes have to be reviewed and approved by government bodies. Any changes in how customers are classified have to be likewise approved.

The legal mandate for Utah power companies (one of the states served by PacificCorp) is to provide electricity that is "safe, reliable, and at a reasonable cost."

Given that representative governments typically oversee the price and distribution of utilities, if the utilities are ogres, it is ultimately the citizen's fault.

Legally, utilities are providers of an essential public service. They have a defined service area where they have an obligation to serve every customer that wants service. Because of that obligation to serve, utilities have to engage in long-term planning: what customer growth is likely to be; what resources need to be available to provide safe, adequate, cost-effective power. Any facilities that need to be constructed will be constructed, according to proper planning and budgeting for future changes.

Something that Eskelsen clarified for me, that I had misunderstood, is that night-time usage of power is very substantial. Grid-wide, it doesn't fluctuate like an individual household might fluctuate in nighttime versus peak times. Industrial customers, who are the biggest users, run through the night. So rather than nighttime power consumption being maybe 1-5% of peak, it's closer to 40-50% of peak.

This is actually very good news to us in the exotic free energy sector. I had been concerned about what would happen if a bunch of 5 kW free energy devices were deployed within the grid, pumping full power through the night, when it's not needed. It is needed. That would not be a problem. If there were enough customers doing that, the power company would merely ratchet down its production, to compensate.

It will take time for such systems to become widespread enough to begin impacting the grid. And as they do, the representative government oversight bodies will be keeping a close eye and regulating how those changes take place.

There are several classifications of customers by the utilities, including: Industrial, Commercial, Residential. PacificCorp would like to see a new classification arise: Net-metered Residential. That way they could have a unique pricing structure that would be egalitarian and commensurate with their usage of the system, rather than the broad customer base providing the buffer for shortages from net-metered customers not pulling their weight in covering the infrastructure costs. The Commercial and Industrial classifications have separate facilities charges broken out.

Another point that Eskelsen made that I found a relief is that in Utah, the net meter is not a "smart meter." They are usually digital, and radio-read. But they don't measure time of use, so there is no way to price separately for peak versus non-peak usage.

# # #

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Page composed by Sterling D. Allan
Last updated August 01, 2015




"It is harder to crack a prejudice than an atom." // "I'd rather be an optimist and a fool than a pessimist and right." -- Albert Einstein

ADVISORY: With any technology, you take a high risk to invest significant time or money unless (1) independent testing has thoroughly corroborated the technology, (2) the group involved has intellectual rights to the technology, and (3) the group has the ability to make a success of the endeavor.
All truth passes through three stages:
   First, it is ridiculed;
   Second, it is violently opposed; and
   Third, it is accepted as self-evident.

-- Arthur Schopenhauer (1788-1860)

    "When you're one step ahead
of the crowd you're a genius.
When you're two steps ahead,
you're a crackpot."

-- Rabbi Shlomo Riskin, (Feb. 1998)

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