100 YO Utility model. Gone in 10 years?

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CaptSpiff

Minister of Fire
Jan 13, 2014
550
Long Island, NY
Not likely, and it won't look that different.

A 100+ years ago there were lots of local power companies serving overlapping areas in towns and cities. Much like oil and propane companies still do today. If you wanted power you'd contact the owners and they'd decide if it was worth their effort to string some poles and lines to your company (it was never worth it to string wires to anyone's personal house). Sometimes the owners would install a generator at your factory, lease it to you, and even supply some extra power next door.

The problem came when private property owners objected to putting any power poles on their land. Unlike telegraph poles, which were deemed for the public good, these power poles just fed wealthy company and factory owners. So the result was many small private power pockets, with little electricity available for the masses.

It didn't take long for the "exclusive franchise service territory" concept to be considered for the electric power companies. State governments created Utility Commissions and wrote laws allowing exclusive rights to a single Franchisee to "make, distribute and sell" electricity within that defined service territory. That franchisee was given rights to place poles on private property, and be exempt from many local zoning requirements. In turn the Franchisee had to agree to limit their profits by having their service fees regulated by the Utility Commissions.

Most Franchisees (Utilities) were allowed a profit (recovery) of 10% over cost, so the build-out boom began. Utilities were not too concerned about cost, or overrun, because they'd get 10% forever on that total investment. The banks were happy to lend to Utilities because they were protected by the franchise from the govt. The govt was happy because they had "arms length" control of the Utilities via the annual Rate reviews, the Utilities acted as their surrogate tax collectors via monthly user fees, and the Commissions were cushy job assignments awarded to the well connected.

Up until very recently it was strictly forbidden to privately make power and be connected to the power grid. The Utilities saw this as an infringement on their franchise. The Commissions & Utilities set up very onerous hurdles requiring major investments for anyone to get a licence for CoGen. The Feds finally stepped in with the PURPA laws that opened the gates.

Now the Fed & State Govts looking to promote renewable energy are crafting exemptions to the Utility Franchise laws and providing big $ to stimulate the efforts. Wind and PV technology refinements are increasing geometrically, and the cost of production is plummeting as more manufacturing is coming online worldwide.

This is essentially where we stand today. The Utilities have seen a small squeeze on their profits as load is reduced by behind the meter generation. The Govt is seeing a similar reduction in their "user fees" collected via monthly billing. The Utilities are generally being made whole by rate increases, but warnings are being sounded that fewer and fewer users will be paying the utility investment as "net metering" grows.

I can only predict this will be turned into a "haves and haves not" political debate. Where the "rich" who could afford RE behind the meter, will be pitted against the "poor" who could not afford the up front cost and now must pay for the whole embedded Utility infrastructure investment in their monthly bills. I wish we lived in a less polarized time where we could debate this, but I'm not holding my breath.

The legislation already floated in several States seem focus on the following solutions:
1. increase the monthly flat "meter charge" from $10-15/mo to $50-60/mo, and reduce the T&D charge proportionally.
2. require special (expensive & customer paid for) bi-directional meter with communication at each location with RE behind the meter.
3. re-write local net-metering laws to limit sell-back to wholesale or time of day rates.
4. reduce or eliminate incentives for installing RE behind the meter, replaced by incentives for before the meter installs.

Every one of these does not look good for us, neither those who were early adopters, or those looking to jump in later. But they do look like they will perpetuate the Govt/Utility franchise model for a long time to come.

I hope you're not bored by this long winded brain dump. I'm very interested in where you see this going.
 

DBoon

Minister of Fire
Jan 14, 2009
1,262
Central NY
increase the monthly flat "meter charge" from $10-15/mo to $50-60/mo
If it comes to that, I'm buying batteries and disconnecting from the grid....
 

woodgeek

Minister of Fire
Jan 27, 2008
4,441
SE PA
We've been over this....

1. Wind is a cheap power source that acts like a central source to any utility that wants to buy its power. Business model does not need to be changed (at low penetration)

2. Residential PV under net-metering arrangements (PV owners get retail) makes distributors money per kWh when the PV owners neighbors pay the utility for power the PV owner made, without using their long-haul grid or infrastructure to get the kWh there. The losers are the generators making a killing selling peak power at very high rates...PV shaves the peaks, and cuts into those folks' profits. But the same 'peak shaving' lowers the average cost of electricity for everyone else on the grid.

Anything else a utility tells you is bunk.
 
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jebatty

Minister of Fire
Jan 1, 2008
5,794
Northern MN
Not so simple. Government agencies, large and small businesses and utilities themselves all know that the future is RE. The politics in favor of supporting utility rates to guarantee utility profits also will change. In Minnesota, the Metropolitan Airports Commission (Minneapolis-St. Paul International Airport), a government agency, just approved a 3 MW PV project on top of two parking ramps. Solar Parking Ramps
http://[URL="http://www.bizjournals...t-solar-project-parking-ramps-led-lights.html
 

woodgeek

Minister of Fire
Jan 27, 2008
4,441
SE PA
Totally agree with Jim, the RE horse is out of the barn, at least in most US states. Simple retail net-metering is/was a great way to get the party started (as opposed to generation subsidies like in the EU), and will work well in any state up to some level of energy penetration (~10% or so). Beyond that, more complex issues do come into play, but there are still plenty of business opportunities.

I think that wind and solar are both big enough for their lobbyists (AWEA and ASEA) to counter the FF lobby. :rolleyes: Goddess help us!

If you are fascinated by this stuff Cap, and want to see the future, curl up with the Minnesota Value of Solar Tariff (VOST):
http://mn.gov/commerce/energy/topics/resources/energy-legislation-initiatives/value-of-solar-tariff-methodology .jsp
and let us know what you think.
 
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jebatty

Minister of Fire
Jan 1, 2008
5,794
Northern MN

CaptSpiff

Minister of Fire
Jan 13, 2014
550
Long Island, NY
.... In Minnesota, the Metropolitan Airports Commission (Minneapolis-St. Paul International Airport), a government agency, just approved a 3 MW PV project on top of two parking ramps. Solar Parking Ramps

quote from the article:
"A $25.4 million project at Minneapolis-St. Paul International Airport will cover two parking ramps with solar panels, convert lights to energy-efficient LEDs and add electric vehicle chargers."

That is the Trifecta of RE implementation !

I just wish it was more economically viable (shorter payback) for private sector also:
"Metropolitan Airports Commission CEO Jeff Hamiel said the airport will save hundreds of thousands of dollars per year."
 
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