I attended the Colorado Solar Energy Industries Association (COSEIA) meeting this week. During the Wednesday luncheon, Colorado’s Lieutenant Governor Donna Lynne gave the keynote address. During her remarks, Ms. Lynne mentioned that there was a “sunset clause” on Colorado’s Energy Office, presently headed by Kathleen Staks, explaining that there was some question that the Energy Office would be funded in the future.
It should be mentioned that Colorado’s Solar community is enthusiastic, inventive / innovative; in short, they personify the best that solar industry participants have to offer.
When the time came for questions, it occurred to me to ask, “Is there a sunset clause for now unnecessary government-granted monopolies?” Naturally, I was referring to the utilities. Ms. Lynne did want to have to answer this question (there were almost certainly members of the press nearby) and side-stepped it. XCel Energy (I think that’s right) is still serving hundreds of thousands of homes and businesses, and she mumbled something about “certainly not wanting to impact existing businesses.” OK, fair enough. we all get that.
Nonetheless, — last November, my friend Barry Cinnamon crafted a well-reasoned answer to the conundrum associated with state-granted monopolies to utilities.
“When generation was expensive and centralized, we needed a utility industry run by monopolies. Now, with inexpensive DG solar and storage a reality, this monopoly business model adds costs, limits economic growth and constrains our continued technology leadership.” [Source: Barry Cinnamon, The Rise of DG Solar and Competition, Solar Industry Mag, Nov. 2016, Sundown]
You’ve heard it from me before, so I will ask that you forgive a forgetful old man, but I remind you that the utilities were aware of this a long time ago.
While tariff restructuring can be used to mitigate lost revenues, the longer-term threat of fully exiting from the grid (or customers solely using the electric grid for backup purposes) raises the potential for irreparable damages to revenues and growth prospects. This suggests that an old-line industry with 30-year cost recovery of investment is vulnerable to cost-recovery threats from disruptive forces. [Source: Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business, prepared for the Edison Electric Institute and published in January 2013]
This was published in Jan 2013. The study had to be commissioned a year before that.
The bottom line is that the utility business, as it is presently constituted, does not need monopoly protection. Sell your stock, or if you have a really good crystal ball, short it!
Maybe we should talk about what makes the Utilities different from the hundreds of innovative startups that I have known of or worked for over the past several decades. We’ll save that for another day.
In the meantime, Happy Trails!