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>Why should they pay wholesale? They're not buying in wholesale quantities from each consumer. Why should they pay retail? As a consumer thinking about solar,

by dpark 11y ago

>Why should they pay wholesale? They're not buying in wholesale quantities from each consumer. Why should they pay retail? As a consumer thinking about solar, I like that, but it makes no economical sense. What business can afford to buy and sell for the same price? You don't sell a car to the dealership for the price they will sell it for. That would be absurd.

vinceguidry 11y ago
I don't think they should pay retail either. But a power company is not a normal company, it's a government-supported effectual monopoly. So what they should pay for stuff is going to be by nature more political than economic. My guess is that they're going to compromise at around 75% of the difference between retail and wholesale. Nobody, except the power companies, really wants to see solar disappear, so the solar side is going to have more political might in this fight.
- dpark 11y ago
  A discounted rate is certainly reasonable, maybe not wholesale if the goal is to encourage solar. Wholesale rate plus high fees is ridiculous, though. That seems to serve no purpose except to make solar nonviable. That could easily make it more expensive to have solar than not (without even accounting for procurement and installation costs).
deathhand 11y ago
Electricity is covered under something as defined by the government as a "Utility" and thus not a private organization. http://legal-dictionary.thefreedictionary.com/Public+Utilities http://legal-dictionary.thefreedictionary.com/Public+Utiliti...
logfromblammo 11y ago
The solar power is inherently less valuable to the grid than the wholesale power it can get from on-demand variable-output plants, or even the wholesale power it gets from always-on baseload power plants. If they are forced to buy the uncontrollably variable distributed solar energy, it will be at the expense of the peaking plant, and possibly even the baseload plant, if there is a large enough gap between peak solar production and peak energy consumption. So it should pay, at most, the price it would have otherwise paid from the power plants if distributed small-time solar installations weren't forcing their excess production back onto the grid. That means paying less than wholesale. So those solar installations end up paying a bit for the service of using the grid a like a storage battery--as they should. If you're going to demand equal compensation for your solar power as the peaking power plant, you will have to install equipment on your end that allows the grid to control how much power it chooses to buy from you. Otherwise, it's like haggling over the price of a meal that is already eaten.
thescriptkiddie 11y ago
A power company is not a normal business, they are a public utility. They aren't supposed to be making money, they're supposed to be providing a public service.
- vosper 11y ago
  Who says they can't do both?
  - feld 11y ago
    The law. Utilities cannot profit on the electricity they sell.
- danans 11y ago
  Actually, the fact that government-regulated private utilities are very reliable and low risk generators of investment returns (people still consume energy during a recession) is the reason they are a cornerstone of many retirement investment funds. Locally operated municipal utilities, however, are less likely to be turning a profit, at least not one that benefits shareholders. Edit: clarifications
Nelson69 11y ago
The utilities here charge me a connection fee, regardless of my meter. I get all of my energy from a roof top solar system but to stay on the grid I have to pay a connection fee which in my mind covers transmission costs and infrastructure. Being that it's a utility I can see them charging for that stuff, some how, either by a fee or by arbitrage between wholesale and retail costs, that seems reasonable. It radically changes the value of solar though. If you can sell energy at wholesale prices what's the argument for restricting your ability to buy it at wholesale? Could you buy it from a different provider and just use the utility to transmit it?
apendleton 11y ago
> Why should they pay retail? Obviously under completely free-market conditions, they wouldn't. But under those conditions, power companies would burn nothing but coal and nobody would have any solar. Coal is really cheap. Retail net metering is society actively meddling with the free market to mitigate a societal ill, and forcing big polluters to subsidize cleaner energy. I don't see a problem with that.

by dpark 11y ago

vinceguidry 11y ago

I don't think they should pay retail either. But a power company is not a normal company, it's a government-supported effectual monopoly. So what they should pay for stuff is going to be by nature more political than economic. My guess is that they're going to compromise at around 75% of the difference between retail and wholesale. Nobody, except the power companies, really wants to see solar disappear, so the solar side is going to have more political might in this fight.

dpark 11y ago
A discounted rate is certainly reasonable, maybe not wholesale if the goal is to encourage solar. Wholesale rate plus high fees is ridiculous, though. That seems to serve no purpose except to make solar nonviable. That could easily make it more expensive to have solar than not (without even accounting for procurement and installation costs).

deathhand 11y ago

Electricity is covered under something as defined by the government as a "Utility" and thus not a private organization. http://legal-dictionary.thefreedictionary.com/Public+Utilities http://legal-dictionary.thefreedictionary.com/Public+Utiliti...

logfromblammo 11y ago

The solar power is inherently less valuable to the grid than the wholesale power it can get from on-demand variable-output plants, or even the wholesale power it gets from always-on baseload power plants. If they are forced to buy the uncontrollably variable distributed solar energy, it will be at the expense of the peaking plant, and possibly even the baseload plant, if there is a large enough gap between peak solar production and peak energy consumption. So it should pay, at most, the price it would have otherwise paid from the power plants if distributed small-time solar installations weren't forcing their excess production back onto the grid. That means paying less than wholesale. So those solar installations end up paying a bit for the service of using the grid a like a storage battery--as they should. If you're going to demand equal compensation for your solar power as the peaking power plant, you will have to install equipment on your end that allows the grid to control how much power it chooses to buy from you. Otherwise, it's like haggling over the price of a meal that is already eaten.

thescriptkiddie 11y ago

A power company is not a normal business, they are a public utility. They aren't supposed to be making money, they're supposed to be providing a public service.

vosper 11y ago
Who says they can't do both?
- feld 11y ago
  The law. Utilities cannot profit on the electricity they sell.
danans 11y ago
Actually, the fact that government-regulated private utilities are very reliable and low risk generators of investment returns (people still consume energy during a recession) is the reason they are a cornerstone of many retirement investment funds. Locally operated municipal utilities, however, are less likely to be turning a profit, at least not one that benefits shareholders. Edit: clarifications

Nelson69 11y ago

The utilities here charge me a connection fee, regardless of my meter. I get all of my energy from a roof top solar system but to stay on the grid I have to pay a connection fee which in my mind covers transmission costs and infrastructure. Being that it's a utility I can see them charging for that stuff, some how, either by a fee or by arbitrage between wholesale and retail costs, that seems reasonable. It radically changes the value of solar though. If you can sell energy at wholesale prices what's the argument for restricting your ability to buy it at wholesale? Could you buy it from a different provider and just use the utility to transmit it?

apendleton 11y ago

> Why should they pay retail? Obviously under completely free-market conditions, they wouldn't. But under those conditions, power companies would burn nothing but coal and nobody would have any solar. Coal is really cheap. Retail net metering is society actively meddling with the free market to mitigate a societal ill, and forcing big polluters to subsidize cleaner energy. I don't see a problem with that.