Three weeks ago, President Obama laid out his long-awaited plan to address climate change. As he put it in a speech to college students, “I refuse to condemn your generation and future generations to a planet that’s beyond fixing.” Key components of the President’s plan include limiting carbon pollution from power plants and increasing the production of renewable energy. This has major implications for electric utilities across the U.S.
Last week, the CEO of Montana’s largest utility, NorthWestern Energy, indicated in an interview that the utility will take future limits on carbon pollution into account in its planning process. That’s a smart move for future generations, not to mention current utility customers. NorthWestern is also required by state law to obtain 15% of its power from renewable sources by 2015 – and it’s on track to do that.
Unfortunately, NorthWestern Energy has been less supportive of opportunities for homeowners and business owners to invest in their own renewable energy systems like rooftop solar panels and small wind turbines. In addition to reducing pollution, these decentralized renewable energy systems produce energy onsite where it’s used, so it doesn’t have to be delivered across long-distance transmission lines. That cuts waste and increases energy security. And then there are the economic benefits. More than 50 small businesses across Montana sell and install renewable energy systems, contributing more than $10 million per year to the state’s economy. And thanks to rapidly dropping solar prices, renewable energy has never been so affordable for individual Montanans.
Montana law gives homeowners and business owners the right to install small solar, wind and hydroelectric systems on their properties and hook them up to the grid in an arrangement called “net metering”. When a net metered customer produces more renewable energy than they need, the excess flows back onto the grid, the utility sells it to someone else, and the customer receives a credit on their power bill.
Incentives are also available through NorthWestern Energy to encourage investment in small solar and wind systems. It’s a good program, part of the Universal Systems Benefit program that was created by state law and is funded by a surcharge on utility bills for the benefit all utility customers. Unfortunately, despite its involvement in this program, NorthWestern Energy has not been supportive of decentralized clean energy in the policy arena.
During this year’s legislative session, two bills were introduced to increase the size limit on net metered systems and to allow apartment dwellers as well as homeowners to participate in net metering. Unfortunately, neither bill passed, due largely to opposition from NorthWestern Energy. Their argument against net metering is based on the claim that net metered customers are subsidized by other ratepayers.
In making this claim, NorthWestern Energy fails to account for the very real benefits that small solar and wind systems contribute to the power grid. These systems generate electricity without pollution control costs, without costly transmission line losses, and often at times of high demand when electricity on the open market is most expensive. Indeed, studies conducted in Vermont, California, and Texas have found that net metering actually provides a net benefit, rather than a cost, to other utility customers.
But this accounting argument actually obscures the more fundamental issue for utilities. Edison Electric Institute, the trade group of U.S. investor-owned utilities, forecast in a recent report that decentralized renewable energy has the potential to fundamentally disrupt utilities’ business models.
And maybe that’s not such a bad thing. Utilities are regulated monopolies, with a business model dictated by law. That model has been essentially unchanged for more than 100 years; but the world is changing around it. We need a fundamental restructuring of the utility business model to remove the disincentive for utilities to accommodate decentralized renewable energy as one component of a cleaner, more modern energy system. To get there, we’ll all have to be on board: utilities, public service commissions, policymakers, and consumers of electricity like you and me.
Utilities are key here, certainly, but so are consumers. We aren’t passive “ratepayers” anymore – we increasingly have the opportunity to manage our own consumption of energy and to produce our own clean power.
If you have an interest in renewable energy, you won’t want to miss the opportunity to learn more this Saturday, at the third annual Clean Energy Fair in Butte. The Clean Energy Fair is free and open to the public and will feature an all-day schedule of workshops on topics including solar, wind, micro-hydropower, biodiesel, and other technologies, as well as keynote speaker Governor Steve Bullock. There will also be a hybrid and electric car show, live music, and kids’ activities. The fair takes place this Saturday, July 20, from 9 to 4 at the National Center for Appropriate Technology in Butte. For details, visit montanarenewables.org.
In Missoula, I’m Diana Maneta for the Montana Renewable Energy Association and the Alternative Energy Resources Organization. AERO has been linking people with sustainable agriculture and energy solutions since 1974. Visit AERO online at aeromt.org.
This commentary originally aired on July 18, 2013 on Montana Public Radio.