Soul of the Universe

The theologian John Wesley, so taken with electricity, reverently called it the soul of the universe. Less impressed, perhaps, are state regulatory commissions that nonetheless set service territory boundaries to avoid the added expense in duplicative facilities. Becoming the sole source of the good stuff also invited regulation of rates, service standards, and whatever else commissions could conjure. That model has worked well for many of the 3,250 or so electric cooperatives, municipal-owned utilities, and private power companies—despite efforts at deregulation, a memorable but largely disastrous effort to introduce competition.

The enactment of renewable standards affecting half of the states, along with net metering in 43 states, has challenged power suppliers. Still, the reliable service territory law ensures a base of customers to pay for those mandates, whether beneficial or not.

Iowa Goes First

Now comes an Iowa District Court that favors competition at the expense of the incumbent utility. The Iowa Utilities Board (IUB) ruled that Eagle Point Solar could not deliver electricity to a municipal building in Dubuque because that was the province of the local utility, Interstate Power and Light. On appeal, the Polk County District Court said otherwise. That ruling noted that Eagle Point Solar was not a utility in the statutory sense, that the company didn’t own infrastructure, and that it couldn’t meet the building’s total load, among other defining utility characteristics. The District Court opined that solar should be treated similarly to conservation and—get this—“to encourage the development of alternative energy” as “balancing” against the utilities’ monopoly status. Boom, the exclusivity of the service territory law is off the board, at least in Polk County, Iowa. (The decision has been appealed by the IUB, utility interests that intervened, and Eagle Point Solar.)

Ah, solar. In the past five years the cost of solar has dropped 61%. USA Today said that over that same period the average homeowner has seen an annual rate increase of some $300. Next year the U.S. is predicted to be the worldwide leader in solar deployment.

Allan Kind, in a paper entitled “Disruptive Challenges” written for the Edison Electric Institute, observed that solar growth is limited to about 20 major utilities in states that possessed three characteristics for deployment: sun, subsidies, and high electric rates. Being on someone’s tab for subsidies has long been attractive to renewable interests, but the certainty of ever-escalating rates will make solar all that more attractive as a hedge against rates certain to increase.

Electric cooperatives, an occasionally contemplative bunch, formed the National Renewables Cooperative Organization to develop renewable energy, including solar, to meet the interest of the co-op’s member-owners. Responding to customers (a novel idea given the domain utilities have been given to dictate) provides a way to scale solar based on membership appetite and—pay attention to this—ensure that solar deployment covers the cost for the facilities necessary to offset the intermittency driven by clouds and dark of night.

New Utility Paradigm

Electric utilities are no longer the soul of their service area. New entrants will take roofs away from them and, if the Iowa District Court decision is upheld and replicated elsewhere, then the exclusivity will go the way of, well, exclusive service areas. Think not? Consider then an admittedly overhyped observation by NRG Energy CEO David Crane, who is of the mind that, say, Hardware Hank will soon sell generating units to slap onto a homeowner’s natural gas line to firm rooftop solar. That would make the next call, once the province of survivalists, to the utility to “disconnect that line.”

In 2009, Anya Kamenetz wrote an article in Fast Company that said the microgrid could be the answer to our energy crisis. The availability of the juice isn’t an issue, but the quality of that kilowatt-hour is. Kamenetz wrote of a neighborhood in Cambridge, Mass., buying renewables from “Sue Butler’s home” that supplied power to houses on either side of her boutique energy plant. IBM VP of Strategy and Development for Energy Allan Schurr was quoted as saying, “distributed energy is happening.” If Iowa, first in the nation’s presidential caucus, also dictates utility decisions, the case decided by the Polk County District Court will presage the energy equivalent of mobile phones.

Now is the time to determine how to incorporate solar into the array of electric options available to your customers because—most assuredly—others are doing so.

— Mark Glaess is manager of the Minnesota Rural Electric Association.