You Want Solar? Swear Fealty to the Monopoly

Dominion’s Scott solar facility. No FPL-style loyalty oath required.

The push to create retail electricity choice about to start in Virginia is already fully underway in Florida, with the dominant utility there first proposing and then abandoning a stunning opposition tactic. It wanted to offer an attractive solar option only to customers loyal to its monopoly.

The recent Miami Herald story (here), accompanied by a long video clip from a June regulatory meeting on the issue, is in the past tense because Florida Power and Light (FPL) quickly retreated under pressure. 

It’s SolarTogether program is a utility-sponsored community solar approach, open to commercial and residential customer wanting to tap into a wide network of new solar farms.  It is likely to produce lower costs overall for participants.  But to join, customers would have had to support “continuity of the program”, which FPL claims would have to discontinue under a deregulated market structure.  As quoted by the Herald:

“While FPL’s SolarTogether program is poised to be the largest voluntary community solar offering in the United States, participation is limited to the capacity we’re approved to build,” the FPL spokesman said in a statement. “We have felt it would be unfair to allow customers — such as large businesses — to enroll in the program that may take subsequent actions which would work against program goals and potentially impose more costs on other customers.”

And: At an informal meeting hosted by the PSC on June 5, FPL’s Vice President of Development Matt Valle said that “advocating for a position that would unravel this program for anyone who is a subscriber seems to be talking out of both sides of your mouth. If you want to advocate for that position, that’s fine, but you shouldn’t be in the voluntary program.”

Under questioning on the video, company spokesmen said it would not be digging into people’s social media accounts or conducting some “Spanish Inquisition” (their words) to discover who was working for customer choice.  But signing a ballot initiative petition or engaging in open advocacy for choice would prevent enrollment by either residential customers or,  more threatening to FPL, larger commercial users.

Florida advocates are seeking to put retail choice before Florida voters in the middle of the huge 2020 vote turnout, using a petition process allowed by Florida law.  The Virginia Energy Reform Coalition, with a similar goal and perhaps some overlapping financial backers, will have to work its way through the 2020 General Assembly.

The background material on the Florida group’s advocacy website makes the same claims that have started making the rounds here:  up to $5 billion in retail savings per year, plus better service and innovation.  It also points to the parts of Texas with retail choice as the example, citing evidence of success which might or might not translate to other markets.

The text that would be added to Florida’s constitution by the ballot question is here.

Ohio is another state often cited as a model for successful retail choice, and here is Direct Energy’s description of how things work there.  Ohio moved to a deregulated model about the time Virginia started to, 1999, but unlike Virginia stood by the effort.  Virginia returned to a form of regulation in 2007.

The Florida ballot question petition started after proponents failed to insert retail choice language during a state constitutional revision in 2018, a decision made by five members of a seven-member drafting subcommittee.

Who is paying the bills for the petition and public relations drive, which would have to be followed by a major mail and advertising and GOTV campaign before the vote in 16 months?  You won’t find it on the website, although the various companies hoping to offer competitive supply are involved.

A similar fight in Nevada came to be a battle of corporate billionaires, Warren Buffet against Sheldon Adelson, as described by Politico.  Buffet’s “no” campaign prevailed in 2018, reversing a vote in support of the proposal in 2016 that needed to pass a second time to take effect.  Wrote Politico:

 Buffett’s holding company, Berkshire Hathaway Energy, controls several large regulated utilities in the West, including PacifiCorp, which provides power to nearly 2 million customers in six states without having to compete against other power companies.

“One of the reasons Berkshire Hathaway is coming out with such force here in Nevada is because it’s not just about Nevada. They know these discussions are happening in other states too,” said Karen Wayland, the executive director of the Clean Energy Project in Nevada and former energy aide to Reid. The former senator is backing the amendment, but Wayland isn’t affiliated with either campaign.

Reading about the legislative and ballot initiative efforts in Nevada and Florida, with the huge amounts of  customer revenue being fought over by the various business interests, has not changed my earlier conclusion that Virginia needs some changes to its process before starting down this road. But it is probably coming.  Large amounts of money are in play and those who want to chase it or retain it are gathering fast.  All swear protecting consumers is their first loyalty.

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14 responses to “You Want Solar? Swear Fealty to the Monopoly”

  1. LarrytheG Avatar

    You know…… for a source of energy that is said to be “intermittent” and not reliable, the electric monopolies seem to
    be deathly afraid of it becoming widely available.

    These monopolies were built around fossil-fuel and nuke business models and not cheaper forms of energy – wind and solar.

    Clearly, rather than embracing wind/solar, whether it be Dominion or their brethren – they are engaging in heel dragging and obfuscation across the board from regulation to legislation to interfering with referenda.

    Something different must be going on out west. On our travels, we are seeing hundreds, perhaps thousands of very large wind turbines in Kansas, Colorado, Wyoming and Idaho and one presumes that someone invested their money in them and is
    getting a decent ROI. There are NO SIGNS that say “no wind turbines” – on the contrary – farmers seem to be fine with them in their fields and pastures and on ridges and though I looked and looked – I could not find any piles of dead birds on the ground below them!

    From Arco this morning – the first town in the USA to get all of it’s electricity from a Nuclear Reactor

  2. Steve Haner Avatar
    Steve Haner

    All energy is nuclear energy, Larry. One way or another it starts with the fusion reaction in the sun or some previous star. Once you understand that, much becomes clear. 🙂 Well, gravity can be captured and converted to energy. Gravity compresses the hydrogen and sparks the sun’s fusion reaction. The smart ones will now come on and give me a physics lesson on other exceptions to my bold claim.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Actually true fusion power sounds great but is hard to pull off. When I was a Moscow correspondent in the 1980s, the Soviet Foreign Ministry sponsored field trips to the high security Kurchatov Institute (father of their A bomb) where we were shown a “tokamawk” or prototype fusion reactor. It looked like a living-room sized UFO. It apparently worked but to get fusion going they’d have to use great amounts of electricity. One quarter of the lights in Moscow might dim. It still is not in use.

    1. malcol6 Avatar

      Solar is a good option…fusing a people’s option to the changing mix of electricity sources.

      Dominion seeks to be Virginia’s dominating solar provider allowing few, limited industrial PPAs; and always trying to contain any commercial or residential solar users from having their own.

      Dominion owns over 1Gw solar now; solar farms may be their way; however, why does Dominion push the Virginia legislature to constrain letting consumers share and own capital costs by owning their own systems and increase not constrain net-metering and power purchase agreements in Virginia? Such lowers Dominion’s long-term capitalization costs, and increases its goodwill. Roof-top solar makes so much sense over 15 year and longer horizons. I grimace that battery storage tied to the grid is so often and conveniently omitted in the large scale solar discussions…peak demands, and intermittent nature of local solar production, and of course day/night cycles…are overcome…as several Australian states know well.

  4. Granting a monopoly confers significant economic power to the monopoly holder. It is not new. Kings and queens in the 1500s granted monopolies of various sorts to curry favor with powerful members of their courts.

    It is difficult to keep a monopoly balanced between protecting customers or favoring the owners. A simple formula was used for much of the 20th century. Utilities were paid more when they built more, because increasing energy use was highly correlated with with increasing the industrial and economic might of the U.S. for much of the 20th century.

    The oil shocks in the 1970s and 80s, plus the huge cost overruns of the several decade build-out of nuclear plants in the U.S., disrupted the formula. By the 1990s, many states caught on to the change (including Virginia) and deregulated utilities in various ways. Most changes removed putting new power plants in the ratebase; making them pay for themselves in the wholesale energy market without subsidies (guaranteed repayment and profits) from the ratepayers.

    Businesses of all types have discovered that it is cheaper and easier to spend money influencing the political and regulatory process than to invest in improving production processes or improving the value of their products to customers. As big money (Buffet) and the concentration of smaller utilities into huge holding companies occurred, disinformation campaigns and the manipulation of the political process became important methods of increasing profits in the utility business. Dominion went from about 40% of its business coming from regulated sources in the early 2000s to nearly 95% today.

    Duke, NextEra, Dominion, and Southern Company are some of the top ten largest utility companies in the world. Duke and NextEra own the largest utilities in Florida and are attempting to keep much of the solar additions in the state in the ratebase, even though that increases the costs to their customers.

    To be fair, we need to revise the way our utilities are paid. They should be given a new formula for prospering in ways that benefit their customers. Perhaps we should give them a way to earn more if they perform better, similar to what happens in unregulated markets. But the regulators and the people should determine what “better” means, not the utilities who write the bills for legislators to pass. Opening up choices for energy suppliers would certainly reduce costs, as long as the wires are properly improved and maintained at a fair return to the utilities.

    We the people must abandon our ignorance, indolence, and inaction related to important energy issues. It is too easy to play the victim and blame the problems on others. The money is being extracted from businesses and families throughout the state. Right now, effective PR campaigns carry the day. We can do better, for ourselves, our state economy, and for our energy companies.

  5. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    “You Want Solar? Swear Fealty to the Monopoly.

    This is not news, though some might be surprised “to learn” that the entire business plan of the solar and wind industry is to carve up a monopoly between them, despite the fact that such a monopoly is doomed to failure on all counts.

  6. Reed,

    I am puzzled by your claim of a “monopoly” for independent solar providers in Virginia. For example, if Virginia had the type of market choice that exists in many other states, an independent developer could sell its solar output through a power purchase agreement (PPA) to a business. The PPA would have a fixed price for the 30-35 year life of the facility that is less than the customer is paying for electricity now. The customer would avoid the steady increase in utility rates that occur because the utility keeps adding generation and other projects to its rate base. The PPA would charge only for electricity (kWhs) delivered not for costs that are charged by the utility no matter how much a new facility is used.

    Whatever amount of energy the PPA provides, it would result in a savings for the customer. The developer has a choice of using solar panels and other materials from various providers, and must supply energy at a competitive price or they wouldn’t get any business. All such contracts would be voluntary, as opposed to the single choice that utility customers now have.

    This choice-based, market system is a far cry from the monopoly control that utilities now have in Virginia. The utility would be reimbursed at cost plus profit for any electricity transmitted on its wires from an independent facility (unless the PPA was between an independent power producer and the utility).

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Tom says: “I am puzzled by your claim of a “monopoly” for independent solar providers in Virginia.”

      I am talking about a different and overriding issue. Proponents pushing for 100% renewables for the generation of electricity in US are by definition pushing hard to create of an iron clad monopoly for renewables, one that will push out of the marketplace all other sources of electric power production – gas, coal, nuclear, oil, primarily. In my view, such a monopoly will lead to a disaster because renewable power cannot stand alone (it’s too unreliable and intermittent to get the job done alone) and it’s hugely expensive, and inefficient. So, for example, the great bulk of America’s reduction in carbons over recent decades are largely the result of replacing old dirty coal plants with new or modernized gas plants, nuclear, and cleaner coal plants. This is the real revolution in dealing with carbons. It is also key to making renewable electric power viable at all in the marketplace.

  7. Acbar Avatar

    Reading between the lines, and without any knowledge of the specifics of the FPL program originally offered, I’d suspect that FPL had trouble getting this solar promotion approved by its state commission, and therefore set it up this way, strictly within the new generation parameters fixed by its regulators, in order to bolster its eventual claim to recover the costs of this program through retail rates from customers. And when the newspapers set up a hue and cry about the program’s limitations, FPL was thinking, “OK, throw me in that briar patch.”

    Virginia, as TomH hints, has an arrangement with PJM that creates a wholesale sale option for homeowners with solar and also creates options for a PPA provider of solar that may not exist, for example, in TX. As for retail choice in Virginia, bring it on.

  8. J. Abbate Avatar
    J. Abbate

    Market forces are now beginning to drive solar and wind power generation at both the larger utility level and at the more local residential or community level. Our community was able to install two solar arrays, one rooftop and one ground mount, to relieve us of an estimated $1500 of our energy bill. We are utilizing net metering with our utility, Central Virginia Electric Coop. The financial analysis of the benefits from solar lead to the investment starting two years ago. We can replace our electric bill with an investment for the same money in our solar array. It will be paid back within 7 to 10 years, and we will have a 30 year working asset in the array with no continuing cost other than maintenance. Likewise, the dropping investment cost of building solar generation and the lower cost of the resultant power will continue to drive the implementation at the utility level. We are now tracking battery technology and looking forward to building a larger solar field to cover our entire community’s power needs. We realize that CVEC will continue to provide a mix of generated electricity for us, until we can generate for all of our needs. The continued investment growth in solar and wind by major utilities, including Dominion and Duke, only shows the inevitable transition driven by cost and efficiency.

  9. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    There are differing opinions on this issue. For example:

    Anthony Watts / 18 hours ago July 9, 2019

    By Tim Benson

    A June 2019 analysis from Scottish consulting firm Wood Mackenzie estimates the cost of transitioning the United States to 100 percent renewable energy by 2030, as recommended by the “Green New Deal” and other overzealous climate change plans, would cost at least $4.5 trillion over that time period.

    “For any country to embrace a nationwide transition to 100 percent renewable energy … or zero carbon … emissions constitutes a massive disruption with far-flung economic and social repercussions,” the analysis states. In the United States, that means a $35,000 cost to each household, around $1,750 per year for 20 years.

    “The total price of transition,” the analysis states, “includes everything needed to reliably produce and deliver clean energy to consumers. This price includes building and operating generation facilities, making capacity payments, investing in transmission and distribution infrastructure, delivering customer-facing grid edge technology and more.”

    This is not the first analysis to show the high cost of radical plans to decarbonize the economy in a single generation. The American Action Forum estimates the costs of moving the entire country to 100 percent renewable sources would be $5.7 trillion, or $42,000 per household. A 2019 brief from the Institute for Energy Research estimates getting to 100 percent renewable generation is “nothing more than a myth,” and attempting to do so would be an economic “catastrophe” for the United States …”

    For more of this article see:

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      As stated and predicted many times before on this blog, read this and its underlying MIT Technology Review article:

      “China has slashed clean energy funding by 39%, leading a global decline by charles the moderator / 1 min ago July 12, 2019

      See the links in the “big picture paragraph”

      From MIT Technology review

      Worldwide funding of clean-energy projects fell to its lowest level in six years, in a staggering blow to the battle against climate change.

      The findings: BloombergNEF found that global investments in solar, wind, and other clean energy sources added up to $117.6 billion during the first half of 2019, a 14% decline from the same period last year and the lowest six-month figure since 2013.

      China saw a 39% drop in investments, as the nation eases up on its aggressive solar subsidies to get costs under control. But spending also declined 6% in the US and 4% in Europe, part because of policies that are being phased out and weak demand for additional energy generation in mature markets.

      The big picture: The new report suggests last year’s slowdown in renewable-energy construction has extended into 2019, taking the world in exactly the wrong direction at a critical time (see “Global renewables growth has stalled—and that’s terrible news”). Every major report finds that the world needs to radically accelerate the shift to clean energy to have any hope of not blowing past dangerous warming thresholds (see “At this rate, it’s going to take 400 years to transform the energy system”).

      Full article here with link to MIT Review Article:

  10. Reed, you say “I am talking about a different and overriding issue.”

    Indeed you are.

    I am advocating for:

    1) Free choice
    Customers should be allowed to choose energy services that meet their needs and save them money.

    2) A new method for our utilities to prosper in ways that serve their customers and their shareholders, not just in ways that serve their shareholders.

    3) Avoiding energy policies paid for by special interests (in this case utilities) that harm families and businesses in the territories they serve.

    I don’t want to put words in your mouth, but by your opposition to this you appear to be against free choice and for government telling people how they must spend their own money. That doesn’t seem to be congruent with your position on other issues.

    Florida Power & Light, the utility described in the article, is owned by NextEra the second largest utility in the U.S. and the fourth largest in the world. It is attempting to lock in its customers to using only solar that it builds and controls, instead of solar provided by others that could supply equivalent reliability and output at a lower cost to customers.

    We granted utilities a monopoly in order to avoid the expensive duplication of wires, not to control all of our energy choices.

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