Across the country over the last few years, in states like Arizona, Nevada, and Wisconsin, we’ve seen acrimonious electric rate cases crop up, particularly around proposals to increase upfront, fixed charges for homeowners and businesses. Utilities and the state public utility commissions that regulate them are proposing these and other rate options as they grapple with the growth of distributed clean energy resources like distributed solar power, and energy efficiency. Unfortunately, not all rate options are created equal, and the resource-intensive and highly contentious proceedings where these options are considered can—at times—yield disastrous consequences for consumers.
Back in December, I wrote about the excellent work last year of forward-thinking utility commissioners. Nearly three-quarters of the commission orders issued in 2015 either rejected outright higher fixed fees or modified them to be smaller, incremental increases.
But what about the cases where regulators did not hold the line? In those, customers are now shackled with higher upfront fees, before they even turn on the lights. They have been disempowered, left with fewer options to control their energy bills, and subject to higher costs even as they cut their energy use. The new rate structure undermines their efforts to save energy and money on their electric bill, or even generate their own electricity, delaying critical pollution reductions that could improve the climate and public health for us all.
Things don’t have to be this way.
Utilities and advocates don’t have to confront each other in this way in adversarial rate cases, and utility regulators don’t have to flounder as they figure out how best to integrate the clean energy resources that consumers increasingly want and our current climate instability demands. Clean, distributed energy has much to offer our electric grids, our utilities, and society and the environment as a whole. So why not put together an open and collaborative process among stakeholders, utilities, and regulators—one that values and teases out the benefits of these resources—that can help pioneer new models of smart electric supply and distribution for the 21st century?
That’s what NRDC, National Consumer Law Center, VoteSolar, and a coalition of more than 30 consumer, public health, civil rights, and environmental groups wrote recently in a letter to the head of the National Association of Regulatory Utility Commissioners (NARUC). (See letter here:
Meeting in court is rarely the best way to come up with solutions that require creativity and careful thought. It may seem strange for an attorney to utter those words, but it’s often true. So here’s our vision, in six easy steps, of a kinder, smarter, and likely more effective process:
Go slow: Careful analysis of the benefits and costs of various electric generation and distribution technologies takes time. Rushing into the process, and out of it, too, often means missing out on some of the best ideas for improving electric rates and reliability for everyone.
Work together: Exploring a range of rate designs in a collaborative, transparent process that values what stakeholders and utilities each bring to the table can yield better, more innovative results that can work for a range of interests.
Assemble the facts: By limiting line losses, avoiding the construction of expensive new power plants and infrastructure, and supplying power when and where it’s needed most, solar, energy efficiency, and other local clean energy resources can offer many benefits to the grid and all of us consumers who depend on it. Making sure to collect and include data on these benefits can ensure that utility commissioners have the information they need to make informed decisions.
Test out new approaches: Piloting new, untested rate designs, rather than introducing them en masse, can make sure they work as intended, for the public good.
Pay attention to low-income/special needs households: Low-income consumers and special needs households that might have high electric use due to, say, in-home medical devices such as respirators, are least able to absorb increases in fixed charges and demand charges on their monthly bills. Public utility commissions should pay special attention to how changes in rate structures impact these vulnerable families and individuals.
Teach consumers well: Utility bills and rates are complicated things. Be sure to educate customers about changes in rate designs so they can understand and respond to price signals, like higher rates at times when there’s more demand, in ways that help save energy and money and prevent pollution.
NARUC is taking a bold and important step by working to improve the processes by which state utility commissions incorporate the distributed energy resources that consumers overwhelmingly want.
The signatories on the letter to NARUC are groups that have forged common ground and mutual trust in opposition to the recent push for mandatory fixed fees and untested residential demand charges. Our collaboration illustrates the kind of inclusive and collaborative approach needed to get rate design done right. By working together, in an open and collaborative process, we can appropriately value the benefits clean energy resources bring to the grid, and to each and every one of us.