Will Wisconsin Utilities Be Left in the Dark?
Solar power is a shining American success story. In 1954 the modern solar cell was developed by Bell Labs, and over the past 60 years as solar installations have grown, the prices have dropped dramatically – making solar affordable for more Americans. In fact, a solar electric system is installed an average of every 4 minutes in the U.S. today. Solar is popular close to home as well. According to a recent survey by UW Milwaukee, 68% of Wisconsin residents support using more renewable energy. Solar and renewable energy (while currently a small percentage of our energy generation mix) continue to grow in deployment and have an incredibly bright future.
One group who does not share in the excitement for solar is Wisconsin’s electrical utilities. Many of our modern conveniences run on electricity, and utility companies in Wisconsin have maintained a steady, reliable electrical grid that keeps the lights on and our gadgets charged. Wisconsin currently has a regulated and monopolized utility market, and most residents are served by utilities that are investor-owned. This means the utilities need to generate revenue to keep shareholders happy; the more electricity they produce and deliver, the greater their profit. Other Wisconsin residents are served by either cooperatives (led by a member-elected board), or by municipal utilities that are run by local governments.
Solar power owners generate their own electricity. Any excess electricity not needed on-site flows to the neighbors. Distributed Generation (DG) systems like these perturb most utilities because they don’t fit into the business model that they’ve used for the last 100 years. However, electricity markets are changing to more competitive and a more market-driven approach. Now is the time for the utilities to decide whether to adjust their business models to work effectively and profitably with solar deployment, or to keep doing business as usual.
Many utilities across the country are ready for the market-driven energy landscape of the near future. NRG Energy, one of the largest utilities in the country, is embracing renewable energy by offering their customers the option to lease solar panels for their home. Another example is Vernon Electric Co-op in Southwestern Wisconsin. They built a large solar array and sold panels from the array to their members. This allowed Vernon Electric Co-op members to use solar power at a lower cost, and gave the utility the ability to place the array where it was most needed in their territory. The Vernon Electric Co-op community solar array program sold-out in about two weeks!
Recent rate case proposals to the Wisconsin Public Service Commission (PSC) show several large utilities are hoping to put roadblocks in the way of distributed solar power. Madison Gas and Electric (MG&E), Wisconsin Public Service (WPS), and We Energies have all submitted proposals to dramatically increase the fixed-cost customers pay for their electricity. According to PSC filings, We Energies (the state’s largest utility) is proposing a 75% jump in its fixed-charge rate, and WPS is proposing to more than double its fixed-charge for residential customers and triple the charge paid by small businesses. In addition, both We Energies and Alliant Energy have proposed to reduce the amount they’ll pay for customer-generated solar power.
The utilities claim that solar energy system owners, (as well as customers who have reduced usage due to energy efficiency measures) are not paying their “fair share” to maintain the utility’s infrastructure, because they use less utility-generated electricity. Two very important things to note about the “fair share” claim. First Wisconsin utilities are making this claim without providing any supporting data. Second the number of distributed solar power generators is extremely small. However, studies in California, Nevada, and Vermont have shown that distributed solar energy actually reduces costs for utilities AND saves ratepayers money in the long-term.
A study commissioned by the Public Utilities Commission of Nevada found that rooftop solar and other small clean energy systems installed through 2016 will deliver $36 million in net benefits to Nevada ratepayers. The study found that the benefits of Nevada’s distributed solar energy systems include: savings on expensive and polluting conventional power; reduced investments in transmission infrastructure; reduced electricity lost during transportation over power lines, as surplus solar energy flows to the grid and is consumed locally; and savings on the cost of meeting carbon reduction and renewable energy goals.
In a recent Energy Law Journal article, energy policy researchers Elisabeth Graffy of Arizona Sate University and Steve Kihm of the Energy Center of Wisconsin suggest that the proposed fixed-rate changes and reduced price for purchasing solar power from customers could set the stage for customers becoming increasingly unhappy… to the point where they may leave the utility grid entirely. Living “off-grid” might sound far-fetched to some people, but companies like Solar City and NRG are already deploying battery storage systems in test markets that would allow customers to do just that.
Wisconsinites clearly want to utilize more clean energy and all of the benefits that go with it. Will our utilities and regulators embrace the bright future of clean energy, or stick with the status quo and be left in the dark?