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To me this situation has always seemed backwards. Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cos

To me this situation has always seemed backwards. Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage. Yes, this doesn't encourage reducing electricity usage, which isn't as great for the environment. But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar.

ender341341 3y ago
There's a similar issue with water usage, lots of locales have been so successful in lowering water usage in their communities that previous usage based fees don't cover the minimum operating cost of the utilities.
- ThatPlayer 3y ago
  It's also happening with gas. Especially because switching to entirely electric is an alternative (and being pushed). So gas prices have to raise to make up for infrastructure cost, incentivizing individuals to move off gas to save money, repeat.
sowbug 3y ago
If the money earmarked for upkeep goes to upkeep, that sounds like a nice plan. Unfortunately, PG&E has a history of collecting upkeep fees and paying them out as shareholder dividends.
dixie_land 3y ago
The situation is backwards because instead of taxing the sh*t out of everyone (including non solar homeowners) and give incentives to select few, people can simply afford solar (or whatever solution they want) if the government hasn't robbed them.
- deepsun 3y ago
  Sorry couldn't resist a side nitpick: > if the government hasn't robbed them Since dawn of times government robbed people (aka taxes). That's basically the definition of a state. It's actually the first and most important task of any state -- collecting tribute (the second is preventing other states doing the same). So, if we're looking for a state that doesn't rob it's people, we should look for another universe perhaps.
lazide 3y ago
FYI, this creates a perverse incentive for the utility to create as high costs as they can plausibly get away with. It’s a big issue with military contracts too, or any ‘cost plus’ arrangement. They are not incentivized to be efficient anymore, rather the opposite.
mike_d 3y ago
> based on the actual costs to the electric provider They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.
- Night_Thastus 3y ago
  That's a very extreme example not representative of day-to-day operation.
  - tomcam 3y ago
    I’m not sure you would have such a cavalier answer if you had suffered the same consequences as those people in Texas. The situation has to be accounted for.
  - Spivak 3y ago
    Yes but there is no universe where I want to expose myself to capped upside and unbounded loss. Or stated more generally over a large population building in the insurance is favorable to you because you will never collect on those five figure residential bills, charging ruinous amounts of money for the average family are just loss.
- Dma54rhs 3y ago
  A fair amount of the EU market is also on it, it's not a special Texas company thing.
- deadmutex 3y ago
  > They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills. That's not necessarily because grid costs + generation costs were separate. If you want to isolate yourself from the volatility of hourly electric price, the power company can still do that by buying insurance / hedging in other ways on behalf of the customer. The insurance cost can be billed separately, or included in the variable rate (depending on the underlying cost structure of the insurance).
ThatPlayer 3y ago
I think it makes sense for peak electricity usage to have to pay more for upkeep and infrastructure. Building everything out for peak usage is where the higher costs come from. If my usage during peak is 1kw and my neighbor's is 10kw, our local grid will have to be able to support 11kw. How should those costs for infrastructure be split?
dragonwriter 3y ago
> Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage. California recently adopted a version of this. > But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar. California has adopted mandates for solar on new construction; reducing separate incentives is not a decision “to stop putting up solar”.
raggles 3y ago
New Zealand has recently directed distributors to change to cost reflective pricing, which resulted in big increases in the fixed daily charge, and moderate decreases in the variable charge. Lots of people hated it, but it's clearly the right thing to do.
dontlaugh 3y ago
Isn’t that the case everywhere? I get charged per day and per kWh separately.

ender341341 3y ago

There's a similar issue with water usage, lots of locales have been so successful in lowering water usage in their communities that previous usage based fees don't cover the minimum operating cost of the utilities.

ThatPlayer 3y ago
It's also happening with gas. Especially because switching to entirely electric is an alternative (and being pushed). So gas prices have to raise to make up for infrastructure cost, incentivizing individuals to move off gas to save money, repeat.

sowbug 3y ago

If the money earmarked for upkeep goes to upkeep, that sounds like a nice plan. Unfortunately, PG&E has a history of collecting upkeep fees and paying them out as shareholder dividends.

dixie_land 3y ago

The situation is backwards because instead of taxing the sh*t out of everyone (including non solar homeowners) and give incentives to select few, people can simply afford solar (or whatever solution they want) if the government hasn't robbed them.

deepsun 3y ago
Sorry couldn't resist a side nitpick: > if the government hasn't robbed them Since dawn of times government robbed people (aka taxes). That's basically the definition of a state. It's actually the first and most important task of any state -- collecting tribute (the second is preventing other states doing the same). So, if we're looking for a state that doesn't rob it's people, we should look for another universe perhaps.

lazide 3y ago

FYI, this creates a perverse incentive for the utility to create as high costs as they can plausibly get away with. It’s a big issue with military contracts too, or any ‘cost plus’ arrangement. They are not incentivized to be efficient anymore, rather the opposite.

mike_d 3y ago

> based on the actual costs to the electric provider They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.

Night_Thastus 3y ago
That's a very extreme example not representative of day-to-day operation.
- tomcam 3y ago
  I’m not sure you would have such a cavalier answer if you had suffered the same consequences as those people in Texas. The situation has to be accounted for.
- Spivak 3y ago
  Yes but there is no universe where I want to expose myself to capped upside and unbounded loss. Or stated more generally over a large population building in the insurance is favorable to you because you will never collect on those five figure residential bills, charging ruinous amounts of money for the average family are just loss.
Dma54rhs 3y ago
A fair amount of the EU market is also on it, it's not a special Texas company thing.
deadmutex 3y ago
> They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills. That's not necessarily because grid costs + generation costs were separate. If you want to isolate yourself from the volatility of hourly electric price, the power company can still do that by buying insurance / hedging in other ways on behalf of the customer. The insurance cost can be billed separately, or included in the variable rate (depending on the underlying cost structure of the insurance).

ThatPlayer 3y ago

I think it makes sense for peak electricity usage to have to pay more for upkeep and infrastructure. Building everything out for peak usage is where the higher costs come from. If my usage during peak is 1kw and my neighbor's is 10kw, our local grid will have to be able to support 11kw. How should those costs for infrastructure be split?

dragonwriter 3y ago

> Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage. California recently adopted a version of this. > But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar. California has adopted mandates for solar on new construction; reducing separate incentives is not a decision “to stop putting up solar”.

raggles 3y ago

New Zealand has recently directed distributors to change to cost reflective pricing, which resulted in big increases in the fixed daily charge, and moderate decreases in the variable charge. Lots of people hated it, but it's clearly the right thing to do.

dontlaugh 3y ago

Isn’t that the case everywhere? I get charged per day and per kWh separately.