by Will Greene
Arizona’s electric utilities have done a terrific job applying a shiny green layer of paint over their fossil-based business model. Relentless advertising and sponsorships (funded entirely by captive ratepayers) feature energy efficiency and solar programs – programs that would not exist absent requirements from the Arizona Corporation Commission.
That is why many ratepayers might be surprised by the recent comments of Ed Fenster, the CEO of SunRun, an industry-leading provider of solar lease programs that have allowed more Americans than ever to participate in the new-energy economy.
"Utilities are very aggressive about it because they've never faced competition and they have always earned riskless profit," said Fenster. "Arizona Public Service (APS), probably the most aggressive anti-solar utility in the country, sent a notice to customers that said because people are recycling their refrigerators and installing CFLs we need to raise your rates."
Despite a facade of support, renewable energy, specifically distributed solar energy owned by average citizens, business owners, or leasing companies, is the most significant long term threat to the existing business model of Arizona’s utilities, who make their profit by owning centralized power plants and transmission lines. Utilities lose money every time a new Arizonan lowers their electric bill by installing a solar system on their roof. The added generation from these installations, combined with Arizona’s aggressive energy efficiency standard, also mean utilities will not be constructing new power plants, causing them to miss out on the reliable and lucrative profit margins that come from centralized projects.
Undoubtedly, American utility executives are looking across the Atlantic in fear. European utilities are facing the erosion of their credit value from Moody’s as more citizens participate in aggressive renewable energy programs that exist throughout the continent. The stranglehold on electical generation that European utilities have enjoyed for a century is lessening. America is headed down the same path, at least unless opponents of renewable energy win the policy debate.
As more solar energy is installed thanks to dramatic cost reductions and state Renewable Energy Standards that exist across the country, the stage is being set for a showdown between utility executives clinging to their outdated monopolized central-control model, and those who would welcome at least some democratization of America’s energy system.