Power Company War on Solar and Energy Efficiency Taking Off

Here is a story from BloombergBusinessweek about the threat of small scale solar power to power companies’ bottom lines.

I don’t put much store in ratings agencies any more after they colluded with investment banks to commit fraud in the real estate bubble, but corporate credit ratings matter to power companies.  Fitch is issuing this report as a warning of downgrades to come if power companies don’t step in and squash rooftop solar power soon.

Utility revenue is increasingly threatened by technology that’s reducing demand for electricity from the grid, including solar panels, smart meters and software that shuts down operations when power prices spike. As some customers’ bills fall, state regulators will let utilities shift some of their fixed costs to other customers who don’t use solar panels, Grabelsky said today from New York.

What is power companies main weapon?

Loss of demand from customers that go solar or reduce consumption in other ways will shift more and more grid costs onto customers that do nothing. Power supplied by U.S. utilities declined 3.4 percent last year, largely from energy efficiency and on-site solar generation, which reduces demand for electricity from the grid, Grabelsky said.

Unless utility rate structures change, that will reduce utilities’ abilities to invest in major new projects and upgrade their transmission systems, Grabelsky said.

“It will have a negative impact on their ability to raise capital,” Grabelsky said. “Regulators will ask, ‘Do you really need all that new transmission when there’s no demand growth?’ There’s the potential for stranding assets.”

There it is “unless utility rate structures change” to penalize the most innovative electricity users and producers, power companies will be in real trouble within 5 years.  This translates into: do away with net metering and charge higher rates to people who install solar panels and invest in efficiency.

Gosh, where have we heard this before?  Maybe here?

So now it appears that the electric power industry has “catapulted the propaganda,” in George Bush’s unforgettable phrase, into the business media.  As the Bloomberg article points out, Arizona’s utility regulators, recently taken over by industry-financed teabaggers, is in the process of instituting just the kinds of rate increases that the power companies want:

Utilities’ efforts to penalize customers that add rooftop systems were recently defeated in Louisiana and Idaho. Arizona regulators are now considering a proposal by its largest utility, Arizona Public Service Co., to reduce the price it must pay to buy solar power from customers.

So be forewarned.  This war will come to your state soon.

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