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Ray of Hope: Californians to Benefit from Solar Energy in Deregulated Market

There are few Californians who have forgotten the energy crisis of 2000 and 2001. Due to market manipulations, illegal shutdowns of pipelines by Texas energy consortium Enron and capped retail prices, the state suffered multiple large-scale blackouts. The promise of energy deregulation — one of cheaper, competitive energy prices — was undermined by megawatt laundering.

It’s no wonder then that many major power users took the opportunity in recent years to revisit the possibility of solar power, especially users who were frequently classified in the highest and most expensive tier of energy consumption.

It helped that California state policy required utilities to pay residential solar system owners for the green power they sent back to the grid. The net energy metering and rebates for solar power have garnered huge amounts of attention, partially because of its coinciding with what many hoped would be (and has been) a successful California Solar Initiative, and also because of the frustration it caused California’s three investor-owned utilities — Southern California Edison, Pacific Gas and Electric and San Diego Gas & Electric.

The utility companies argued against net metering because they believed that the price of the subsidy given to solar customers would be passed on to other non-solar-owning ratepayers.

On the other side of the argument, solar advocates insisted that when a solar customer  produces power at their home or business and exports it to the grid, a power plant somewhere else on the system gets turned down, resulting in natural gas remaining unburned and, as demand grows, future power plants that will never need to be built. Theoretically, this meant solar users would be saving utilities money.

However, the recent Assembly Bill 327, put forth by the California Public Utilities Commission and signed into law on Oct. 7 under the guise of making the state’s power rates fairer to everyone, is predicted to undercut homeowner progression of renewable energy by destroying its cost-competitiveness. The bill, which shifts California’s many tiered system into a simple two-tiered one in order to avoid giving heavy power users massive bills, could result in those very power users no longer seeking the benefit of solar rooftop power and net metering.

The bill intends to introduce monthly fixed charges. The California Public Utilities Commission will consider allowing the three investor-owned utilities to seek permission in order to charge flat fees of up to $10 per month. As a result, no matter how energy-efficient a user is, or how much solar they possess, Californians will be paying an equal $120 per year for power.

For solar users, the end result could mean not only no longer saving money with solar, but possibly losing money. The bill also threatens the businesses of California’s third-party solar companies, such as SolarCity, Sungevity, Clean Power, SunEdison and SunPower, that have depended heavily on the business of high-tier power users.

Still, even solar advocates admit that encouraging high energy prices solely to keep solar energy in the game isn’t ideal either. Solar energy and renewable sources should be a benefit, but not necessarily at the expense of other ratepayers. At some point, with time and due to the finite nature of fossil fuels, solar and other renewables must become an integral part of power utilities. But as of now, the utilities have little incentive beyond customer demand to invest in expanding their use of renewable energy sources.

Meanwhile, in states like Connecticut, New York and Texas, deregulation has been more than a success. Energy comparison sites such as www.texaselectricityproviders.com (Texas) and Energize Connecticut (Connecticut) show available plans from multiple retailers that consist of up to 100 percent renewable energy plans, at similar or equal costs to ordinary energy plans. Users have access to renewable energy through the grid with zero additional installations in home, while their consumer dollar alone encourages the power companies to invest in renewable energy and while they can actively managing their energy use in response to market prices.

Should California re-examine deregulation? Since the energy crisis, the California Independent System Operator, along with the California Public Utilities Commission have responded by wiping away the last vestiges of the state’s earlier energy market structure. In 2009, the Independent System Operator’s market redesign and technology update meant an actively monitored system with rules and structures to prevent a repeat crisis.

In addition, the Federal Energy Regulatory Commission has since adopted anti-manipulation regulations and been authorized by Congress to administer severe penalties for any violations. For some, this is encouragement to look again at a competitive energy market that, for other states, has resulted in a generation of jobs, renewable energy and low consumer cost.

As of today, with a record high majority urging the government to act against global warming, Californians can only look toward SB 43, a bill passed Sept. 28 to provide hope that even without a competitive energy market by the second half of 2014, PG&E and other utilities will have a 100 percent renewable energy plan available for homeowners, businesses and government owned facilities.

Still, the bill provides no guarantee the green initiatives will be approved quickly, stating that utilities still must apply and receive permission to participate in a renewables program. There is even less guarantee that participation will be financially competitive or encouraging to those who have or wish to install their own renewable energy systems.

— Kate Voss is an environmental and technology blogger from Chicago. She focuses her time writing about how to create a more sustainable society and the new technologies which allow this. The opinions expressed are her own.

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