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The email to the governor is actually quite accurate.Big issue with renewables is that their adoption on roofs puts a de facto tax on people who don't have sola

by Riod 11y ago

The email to the governor is actually quite accurate.Big issue with renewables is that their adoption on roofs puts a de facto tax on people who don't have solar (eg apartment dwellers). Why? Because they use the grid as backup and the grid requires significant maintenance. There's a cost to that. As it stands everyone pays for a part of these costs through their power bill. Take enough people away from paying into the grid and all of a sudden rates go up for everyone or the utility takes a loss. You might be fine with the latter but a lot of utilities are rate based. Meaning the government determines how profitable they will be and rate increases need to be justified. Will be very interesting to see how different states tackle this issue in the years to come. The utilities don't like it because incentives for roof based solar mean their rate base erosion gets accelerated. It must be added that this article talks about distributed generation (rooftop). Interesting that the incentives for rooftop development are more than solar plant development even though utility scale solar is far cheaper than rooftop and is sold at wholesale prices via PPAs with utilities. Makes you question what exactly politicians are up to here.

prostoalex 11y ago
The opacity exists because the utilities bundled them that way. Energy generation, energy sales and grid maintenance are three separate businesses, but in many states at least two (if not all three) of those are bundled under the same company. The opacities create distrust - how do you know that an increased "grid maintenance" fee is a true representation of that service, and not an attempt by the utility to cover up losses in other areas?
- Riod 11y ago
  NV Energy is heavily regulated. A rate base utility is allowed to earn a certain % profit each year. This is specified by the authorities. They then work up the income statement to how much they can charge and justify that to the government. Trust me when I say every line item is scrutinised. Don't envy anyone on the utility's side. What's the opacity here?
  - prostoalex 11y ago
    We can have a committee (of politicians who might or might not had accepted political contributions campaigns from the energy sector) doing the regulation and another committee (of appointees with various levels of connections to energy sector) doing the scrutinization, or we can have those broken out as two separate businesses arriving at their numbers independently. Why can't consumers buy kWs from a variety of competing providers, and have them delivered via grid owned and serviced by a third-party? If a major utility decides they can outbid everyone else on grid maintenance contracts due to their superior cost structure or some technological know-how, so be it. Such tight vertical integration does not make sense if you extend the analogy to other infrastructure projects. Grid operator is the toll road operator, energy distributors are the UPSes, FedExes and other trucking companies paying for access to that road, and energy generators are the Amazon.coms and Wal-Marts pitching their kWs to final consumers. The billing is done by three separate parties, and we don't have to establish a supreme committee that decides whether Amazon charges us a fair price on shipping costs and toll road surcharges.
    - Riod 11y ago
      Economics dont always work to split the three because each business needs to have sufficient competition for it to work. You can't exactly build 5+ grids running parallel to each other. The generation part is already competitive FYI. IPPs are a thing (as pointed out in the article). Deregulated markets tend to have spikes or lots of space for IPPs to build and compete. Have you ever looked at the financials of a utility and understood the different rate regimes? Your suggestions come across as pretty naive tbh. Power generation, distribution and retailing is not equivalent to setting up a Walmart. Texas has a deregulated regime and regulators there are always looking into price spikes because customers don't like their bill to change radically from month to month. And their bills aren't exactly lower. And customers can already buy electricity from different providers. One of them is solar city (under a lease). Or resellers.
      - prostoalex 11y ago
        Do you have a reading suggestion on understanding the economics of IPPs and effects of regulation/deregulation? I am also curious about more in-depth reading of Texas situation. Understood that a natural monopoly exists precisely because we don't want to run 5 competitive grids, but it also doesn't prevent a city (or county, or township, or HOA) from owning their last-mile distribution network (and having servicing/maintenance done by a contractor).

by Riod 11y ago

prostoalex 11y ago

The opacity exists because the utilities bundled them that way. Energy generation, energy sales and grid maintenance are three separate businesses, but in many states at least two (if not all three) of those are bundled under the same company. The opacities create distrust - how do you know that an increased "grid maintenance" fee is a true representation of that service, and not an attempt by the utility to cover up losses in other areas?

Riod 11y ago
NV Energy is heavily regulated. A rate base utility is allowed to earn a certain % profit each year. This is specified by the authorities. They then work up the income statement to how much they can charge and justify that to the government. Trust me when I say every line item is scrutinised. Don't envy anyone on the utility's side. What's the opacity here?
- prostoalex 11y ago
  We can have a committee (of politicians who might or might not had accepted political contributions campaigns from the energy sector) doing the regulation and another committee (of appointees with various levels of connections to energy sector) doing the scrutinization, or we can have those broken out as two separate businesses arriving at their numbers independently. Why can't consumers buy kWs from a variety of competing providers, and have them delivered via grid owned and serviced by a third-party? If a major utility decides they can outbid everyone else on grid maintenance contracts due to their superior cost structure or some technological know-how, so be it. Such tight vertical integration does not make sense if you extend the analogy to other infrastructure projects. Grid operator is the toll road operator, energy distributors are the UPSes, FedExes and other trucking companies paying for access to that road, and energy generators are the Amazon.coms and Wal-Marts pitching their kWs to final consumers. The billing is done by three separate parties, and we don't have to establish a supreme committee that decides whether Amazon charges us a fair price on shipping costs and toll road surcharges.
  - Riod 11y ago
    Economics dont always work to split the three because each business needs to have sufficient competition for it to work. You can't exactly build 5+ grids running parallel to each other. The generation part is already competitive FYI. IPPs are a thing (as pointed out in the article). Deregulated markets tend to have spikes or lots of space for IPPs to build and compete. Have you ever looked at the financials of a utility and understood the different rate regimes? Your suggestions come across as pretty naive tbh. Power generation, distribution and retailing is not equivalent to setting up a Walmart. Texas has a deregulated regime and regulators there are always looking into price spikes because customers don't like their bill to change radically from month to month. And their bills aren't exactly lower. And customers can already buy electricity from different providers. One of them is solar city (under a lease). Or resellers.
    - prostoalex 11y ago
      Do you have a reading suggestion on understanding the economics of IPPs and effects of regulation/deregulation? I am also curious about more in-depth reading of Texas situation. Understood that a natural monopoly exists precisely because we don't want to run 5 competitive grids, but it also doesn't prevent a city (or county, or township, or HOA) from owning their last-mile distribution network (and having servicing/maintenance done by a contractor).