Is the Nation’s Electric Grid in Trouble?

As we explained in a blog report earlier this year, most Americans give little thought to the reliability of their electric power grid. That’s because, aside from brief interruptions caused by weather events or other extenuating conditions, the nation’s utilities have a near-perfect record of delivering power to customers. At that time, we described how changing policies could jeopardize the performance of the grid.rural-electric

Now, a new study commissioned by the Electric Markets Research Foundation, entitled “Changing Uses of the Electric Grid: Reliability Challenges and Concerns,” should give policy makers even more cause for concern about the trajectory of U.S. energy policy. The report, which was released at the summer meeting of the National Association of Regulatory Utility Commissioners, outlines a number of ways that the grid could be in real trouble without thoughtful changes.

Read the Full Report Here

According to the report, “new business models and a panoply of emerging energy technologies such as rooftop solar, microgrids and distributed generation could imperil the availability of affordable electricity to all consumers and the reliability of the nation’s electric grid unless the harmful effects of ratemaking subsidies are addressed now.”

PACE has written extensively about solar power and the need for states to reform net metering practices. If left unchecked, bad net metering policies have the potential to shift costs to customers who choose not to install solar panels. Just as dangerous, overly aggressive policies toward solar power also threaten to weaken the reliability of the power grid and raise costs for everyone.

“The new technologies being introduced to the grid have the potential to provide significant benefits. However, it’s important to understand that the integration of these technologies into the grid will increase – not decrease – overall grid costs,” said Steve Mitnick of Build Energy America, the author of the study. “Success ultimately depends on the ability of the grid to accommodate these new uses while safeguarding affordable electric power.”

The report states that most of the 600,000 households nationwide with net metering are paid the full retail price for the extra electricity sold to a utility. However, the utility’s purchase of the excess electricity covers only part of its costs. In fact, the full retail rate paid by utilities under net metering reflects a payment of more than twice what the utility actually saves by buying the power. Other customers must make up the difference, subsidizing homeowners with rooftop solar and net metering.

“Net metering is a double whammy to the utility,” the study noted. “It is an incentive for customers to leave the grid, thereby reducing their contribution to the fixed costs of maintaining the grid. And it imposes additional costs on other customers, most notably the increased costs of integrating customer-owned generation into grid operations.”

“The changing use of the grid can risk the ability of utilities, under traditional regulation, to afford a prudent level of grid upkeep and expansion,” the study said. “If utilities are forced to cut back grid upkeep, for want of sufficient monies, there’s no one standing behind the utilities to step into the breach.”


Gulf Coast Energy Forum Fast Approaching!

The second annual Gulf Coast Energy Forum is now one month away! This free event, which will be held in Tampa on August 26th, will feature a strong lineup of speakers and panelists, covering important energy issues that affect states along the gulf coast. Registration is open to the public, but limited.

Click Here to RegisterGCEF 15 Logo

The keynote roster at the event includes U.S. Representative Gus Bilirakis, who represents Florida’s 12th District just north of Tampa and who serves on the House Energy & Commerce Committee. Also delivering keynote remarks will be Chuck Schmitt, Chairman of the American Iron & Steel Institute and Executive Vice-President and Head of SSAB Americas, and Seminole Electric CEO Lisa Johnson. Tampa Mayor Bob Buckhorn will deliver welcome remarks.

Panel offerings will include a roundtable discussion among four CEOs of utilities in the region, including investor-owned utilities and electric cooperatives; a regulators panel featuring public service commissioners and other regulators; and a panel discussion focusing on oil and gas issues along the gulf coast. Attendees will also hear state status reports from Mississippi Senator Terry Burton (Energy Chairman); Alabama Representative Darrio Melton (House Democratic Caucus Chair); Florida Representative Jose Diaz (Regulatory Affairs Chairman); and National Black Chamber of Commerce President Harry Alford.

The Gulf Coast Energy Forum will take place at the Renaissance Tampa International Plaza Hotel, beginning at 9:00 AM and adjourning at 4:00 PM.

We encourage you to register today, tell friends and colleagues about the event, and help spread the word about the Gulf Coast Energy Forum.


‘Smart Solar Amendment’ Good Move for Florida

PACE has followed with great interest a number of solar issues on the state level, especially as they develop in southeastern states. Recently, we were active in Louisiana as lawmakers there rolled back aggressive subsidies for solar power that were weighing down the state budget.


That’s why news from Florida has caught our attention. Last week, an organization called Consumers for Smart Solar held a press conference in Orlando, Florida, to announce a campaign to place a consumer-friendly solar energy amendment on Florida’s 2016 November ballot. The bi-partisan group, chaired by former State Representatives Jim Kallinger and Dick Batchelor, says its amendment will protect consumers while establishing a stable platform for solar energy to grow sustainably in Florida.

The “Smart Solar” amendment is a direct result of another ballot initiative that has been launched by the solar industry and environmental groups. In PACE’s view, the solar industry-backed ballot initiative completely deregulates small-scale solar installations, putting Florida’s energy consumers at great risk for higher electric bills, subsidies, and even government mandates requiring a minimum amount of solar energy be used in the state. It is easy to see why the for-profit solar industry would favor such an approach, but it’s more difficult to see why creating an unregulated marketplace for a select few energy providers is good for consumers.

“Solar energy will play a growing role in Florida’s energy future, and as prices for rooftop solar decline it will become a more viable option for many consumers,” explains PACE State Director of Operations Abbie MacIver. “Unfortunately, policies that favor one type of energy over another aren’t good for the marketplace and aren’t good for consumers. Those policies can artificially increase electric rates and set the stage for more heavy-handed government mandates and costly subsidies.”

A number of voices, including PACE and economists from MIT, have also argued that policies such as net metering that favor solar power can also cost non-solar customers more money. The “Smart Solar Amendment” takes steps to prevent that from happening in Florida.

“Florida consumers shouldn’t have to pay higher electric bills to make sure that out-of-state solar companies make a profit,” says PACE Executive Director Lance Brown. “The Smart Solar amendment will help ensure that all electric consumers in Florida are treated fairly and pay their fare share. We are pleased to join the growing number of voices supporting this initiative.”