Elon Musk and Leonardo DiCaprio are tweeting opposition to a California solar proposal. Here’s why.
Part I of this two-part article profiled a proposal by California’s Public Utility Commission (CPUC) to blackout the economics of consumer owned solar power. It outlined the damage this would have on businesses, schools, non-profits and households seeking both lower electric bills and reduced climate changing emissions. This second part profiles how your business and your customers could realize lower prices while also accelerating America’s path into a decarbonized economy that promises both climate change solutions and economic growth.
How Consumer Owned Solar Mass Adoption Will Drive the Decarbonized Economy
Here’s what I have observed in working with Californians who have purchased solar power systems:
- They take the risk of buying a solar system to save money;
- Some are also motivated to buy solar systems because of their zero emissions;
- But, it is the promise of lower electric bills that stimulates the purchase of a solar system.
Then, once their solar system proves to lower their electric bills there is a dramatic change in mindset sparked by this question, “What could I do to save even more money?”
The potential for saving even more money through their solar power system motivates consumers to incur the cost of switching out their their “natural gas” (correctly called methane, a more potent greenhouse gas than CO2) furnaces/water heaters with electric furnaces/water heaters.
Then, they get a really big idea, buy an electric vehicle!
Within a year or two, the consumer owned solar purchasers I have worked with have dramatically slashed their greenhouse gas emission footprints. They are achieving today the very future goals that California’s governor and legislature have set for decarbonizing energy consumption in buildings and vehicles.
The CPUC’s proposes a new rate design that destroys net metering’s ability to allow consumers to lower their electric bills. This robs consumers of the economic incentives that would empower them to buy disruptive clean technologies that can deliver lower costs, less pollution and more job growth for all Americans. It leaves them with only one choice, metered electrons!
The Utility Regulation Crisis Created By Disruptive Technologies
Economic history shows that state regulation of utilities is effective in a technologically static environment. If black rotary phones are the only technology solution then regulatory rate designs for using rotary phones can be effective in allocating costs between consumer classes.
Disruptive technology change is a huge challenge for state utility regulation. For example, we have smart phones today despite state regulatory commissions. It was a national deregulation commitment that freed consumers to choose what they wanted to buy and who they wanted to buy it from. State utility regulatory commissions struggled for years to keep up with the speed in which consumers switched their purchases from regulated, landline phone technologies.
The damaging irony with today’s state regulatory approach toward consumer owned solar is that state utility regulation was originally created to enable the financing of a disruptive technology that promised lower consumer prices. That disruptive technology was the central power plant. Monopolies, along with price regulating state commissions, were implemented to finance this hugely expensive technology. Voters/consumers endorsed this system because they saw lower prices.
Today, our state utility regulatory system is in crisis because its focus is still on financing “least cost” utility technology. It totally misses the critical role of consumer behavioral economics because that is not measured at the meter!
The utility regulatory crisis is captured by the California Public Utility Commission’s proposal to kill net metering without replacing it with a path for consumers to realize lower electric bills. Their plan is devoid of a link between utility owned clean technology investments and lower electric bills. This contrasts with the proven results with net metering where consumers buying a solar system achieved lower electric bills that accelerated their shift away from using fossil fuels in cooling/heating buildings, cooking and transportation.
What You and Your Business Can Do to Lower Electricity Prices and Emissions
A legitimate business question is what can you or your business do to address this utility regulatory crisis?
Don’t bother attempting to intervene at the state utility commission. The deck is stacked against you because intervention is extremely time consuming, expensive and largely ineffectual for even the largest corporations.
A starting point on what you can do begins with an appreciation that a super majority of voters (up to 80%, across party lines) support consumer owned solar power. In today’s divided America this is an issue your business can lobby for without threatening customer relationships. In fact it could strengthen them!
The second part of the answer lies in the power of your state legislature. State legislatures have the power to write laws on how state commissions are operated and they have the power to go around the regulatory body by bestowing economic incentives directly to consumers.
So, your 2022 business question is what is it worth to your business to lobby your state legislator on adopting laws and incentives that promote mass adoption of consumer owned solar energy integrated into smart buildings/vehicles?
How you answer that question might be a key solution to your managing 2022’s threatening cost inflation impacts on your business.