Free-Market Dogma Has Jacked Up Our Electricity Bills

[What Would Jesus Do?]

LINK

For those who don't know, David Cay Johnston is a Pulitzer-winning investigative journalist and author who focuses mainly on economic issues.

A new analysis shows that people pay 35-percent higher prices for electricity in states that abandoned traditional regulation of monopoly utilities in the 1990s compared to states that stuck with it. That gap is almost certainly going to widen more in the coming decade.

 

[dandh]

LINK

For those who don't know, David Cay Johnston is a Pulitzer-winning investigative journalist and author who focuses mainly on economic issues.

A new analysis shows that people pay 35-percent higher prices for electricity in states that abandoned traditional regulation of monopoly utilities in the 1990s compared to states that stuck with it. That gap is almost certainly going to widen more in the coming decade.

Umm... the utilities are still regulated in all states, I think, but they are loosening some regulations in some states. So, trying to claim that the "free market" is causing an increase in rates, as your title implies, is misguided at best.

 

[22*43*51]

Ma Bell disagrees.

 

[Titus Andronicus]

Here is one thing I have been wondering about:

Electric utilities are required by law to purchase any and all excess power produced by homeowners with solar panels. They are required, also by law to pay full (peak period?) retail price. Even if they do not resell it, they have to credit the homeowner.

This means that they are making less than nothing on this "purchased" power when and if they resell it to their regular customers, and that in many cases they lose the entire amount that they paid to the homeowner.

This loss would then be absorbed by their regular customers through the payment of higher rates.

..............

Has anyone seen any numbers on how much impact this has had on utility pricing? Over time it will most certainly drive rates higher for all customers. I was just wondering how significant the impact has been to this point.

...................................................................................................................................................

 

[Sooner-Be-Dead]

Here is one thing I have been wondering about:

Electric utilities are required by law to purchase any and all excess power produced by homeowners with solar panels. They are required, also by law to pay full (peak period?) retail price. Even if they do not resell it, they have to credit the homeowner.

This means that they are making less than nothing on this "purchased" power when and if they resell it to their regular customers, and that in many cases they lose the entire amount that they paid to the homeowner.

This loss would then be absorbed by their regular customers through the payment of higher rates.

..............

Has anyone seen any numbers on how much impact this has had on utility pricing? Over time it will most certainly drive rates higher for all customers. I was just wondering how significant the impact has been to this point.

...................................................................................................................................................

Possibly some states have required solar to be purchased but certainly not the majority.

 

[Titus Andronicus]

Possibly some states have required solar to be purchased but certainly not the majority.

My understanding is that 44 states have enacted some form of "Net Metering" policy. Of those only South Dakota calls for the kick-back to the homeowner to be at an "avoided cost" rate. The others call for the refund to be at full retail price.

http://www.ncsl.org/research/energy/net-metering-policy-overview-and-state-legislative-updates.aspx

 

[What Would Jesus Do?]

My understanding is that 44 states have enacted some form of "Net Metering" policy. Of those only South Dakota calls for the kick-back to the homeowner to be at an "avoided cost" rate. The others call for the refund to be at full retail price.

http://www.ncsl.org/research/energy/net-metering-policy-overview-and-state-legislative-updates.aspx

Before my eyes glazed over, it didn't sound like most states are actually required to pay you for the electricity you generate, or even to let you feed into the system.

Letting homeowners sell their power back to the system at retail rates is one of the reasons Germany surged ahead of most other nations a few years back. At that time, it wasn't being done in the US, and it wasn't clear that our grid could even handle it. Apparently that's changing. Which is great. But it sounds like in many states only "qualifying" customers can benefit and that mainly means things like universities and businesses, but not necessarily your average happy homeowner with solar panels on his roof.

Nevertheless, this sounds like movement in the right direction.

 

[Bulldogs1974]

Neighbor has a wind turbine, any excess electricity produced is simply given to the power company. Win/Win for them. It's use it or lose it during peak wind times.

 

[What Would Jesus Do?]

Neighbor has a wind turbine, any excess electricity produced is simply given to the power company. Win/Win for them. It's use it or lose it during peak wind times.

That's what I fear is mainly the case in America. And why would corporate energy companies want to change that?

How noisy is your neighbor's rig?

 

[Titus Andronicus]

Before my eyes glazed over, it didn't sound like most states are actually required to pay you for the electricity you generate, or even to let you feed into the system.

Letting homeowners sell their power back to the system at retail rates is one of the reasons Germany surged ahead of most other nations a few years back. At that time, it wasn't being done in the US, and it wasn't clear that our grid could even handle it. Apparently that's changing. Which is great. But it sounds like in many states only "qualifying" customers can benefit and that mainly means things like universities and businesses, but not necessarily your average happy homeowner with solar panels on his roof.

Nevertheless, this sounds like movement in the right direction.

If my utility is forced to buy power from a third party and to then resell it (if they can) to a fourth party at a loss, how does that benefit anyone other than the person with the solar panels? ***

I personally view these government mandated/sponsored programs (Cash for Clunkers, Rebates on Priuses and Volts, etc.) as a collection of boondoggles for those who like to game the tax system, who are largely middle class and who vote with the left wing. There is no benefit in these programs for the poor; in fact, they are penalized through higher prices for electricity, cars, gasoline and so on.

................................................

*** One offshoot to this bad policy is the industry that has grown up to exploit it. Companies employ banks of telephone sales people to offer super cheap or even free solar panels and then they keep most of the benefits for themselves. The people who sign up get marginally cheaper power, while the companies installing the panels keep most of the rebates.

It seems to me to be a scam, but it is certainly widespread in my state.

(In my view, any business that simply arbitrages legally contrived differences in markets or tax law is a scam. If you prefer to consider such enterprises as being built with a sound business model, please do so.)

 

[Bulldogs1974]

I cant hear it unless im in their yard. But we have 4 acre lots so i'm not that close.

 

[Hawkeyemc]

If my utility is forced to buy power from a third party and to then resell it (if they can) to a fourth party at a loss, how does that benefit anyone other than the person with the solar panels? ***

I personally view these government mandated/sponsored programs (Cash for Clunkers, Rebates on Priuses and Volts, etc.) as a collection of boondoggles for those who like to game the tax system, who are largely middle class and who vote with the left wing. There is no benefit in these programs for the poor; in fact, they are penalized through higher prices for electricity, cars, gasoline and so on.

................................................

*** One offshoot to this bad policy is the industry that has grown up to exploit it. Companies employ banks of telephone sales people to offer super cheap or even free solar panels and then they keep most of the benefits for themselves. The people who sign up get marginally cheaper power, while the companies installing the panels keep most of the rebates.

It seems to me to be a scam, but it is certainly widespread in my state.

(In my view, any business that simply arbitrages legally contrived differences in markets or tax law is a scam. If you prefer to consider such enterprises as being built with a sound business model, please do so.)

This. While solar in general is a good thing, getting the rules right is paramount. Forcing utilities to purchase the power at horrible rates only benefits the people wealthy enough to afford the panels and it actually hurts the customers that essentially pay for these increased costs through their non-solar panel rates. The people with solar panels must be charged some form of a surcharge to pay for the rest of them grid that they use on cloudy days or at night. The grid as a backup is what makes the solar business model even work at all. Some states are even requiring the utility to buy the solar power from customers at a Higher than retail rate. That's just nuts.

And while the number of people on the grid with solar is not a big deal at this point, if you have bad rules now, by the time we finally realize we have an problem, the number of non-solar customers isn't enough to fund the grid And you're at a point of no return.

 

[Bulldogs1974]

This. While solar in general is a good thing, getting the rules right is paramount. Forcing utilities to purchase the power at horrible rates only benefits the people wealthy enough to afford the panels and it actually hurts the customers that essentially pay for these increased costs through their non-solar panel rates. The people with solar panels must be charged some form of a surcharge to pay for the rest of them grid that they use on cloudy days or at night. The grid as a backup is what makes the solar business model even work at all. Some states are even requiring the utility to buy the solar power from customers at a Higher than retail rate. That's just nuts.

And while the number of people on the grid with solar is not a big deal at this point, if you have bad rules now, by the time we finally realize we have an problem, the number of non-solar customers isn't enough to fund the grid And you're at a point of no return.

I would love to see a link showing that your electric company has to pay more for it than they sell it. I would be shocked if they were not required to pay the going rate, nothing more.

 

[icu81222]

Who said this?:

"Energy costs must necessarily skyrocket"