ALEC: There Goes the Sun

In 1989, Dan Shugar, an engineer with Pacific Gas and Electric, demonstrated that distributed generation is a good deal both for electric power companies and their consumers. Distributed generation refers to an energy system consisting wholly or partly of small electricity-generating power plants located near the site of the end user. An example is solar photovoltaic cells on the rooftops of consumers who are connected to the power grid. Through an arrangement called net metering, consumers are credited by the power company with the retail rate for all the electricity the solar collector produces. If it produces as much electricity as the consumer uses—which seldom happens—the consumer pays nothing. Forty-three states have net metering policies, although the details vary from state to state.

Photo by grist.org

However, distributed generation is a pain in the ass to the utility companies. They have a different business model in mind. They would prefer to continue to use fossil fuels, or to build large, centralized wind farms or solar power plants and sell the electricity to their customers at the same rate they are now paying for power from fossil fuel plants, even though renewable energy will be cheaper to produce. So they and their allies at the American Legislative Exchange Council (ALEC) have launched a campaign in the states to eliminate distributed generation. It involves labeling people with solar collectors as “free riders.”

This is their argument: When solar customers sell electricity to the power company, they use the existing energy grid, but they are not paying anything toward the cost of establishing and maintaining that grid. Therefore, they are indirectly increasing the rates of nonsolar customers. Sometimes they argue that poor customers (who can't afford solar) are subsidizing rich ones (who can). To recoup these fixed costs, the power companies want to penalize solar customers either by charging them a monthly fee or by reducing the amount they pay for the electricity solar collectors produce.

One document even claims that distributed generation is an “existential threat” to the power companies. They claim that if solar customers drive up the rates of nonsolar customers too far, everyone will be forced to go solar, thus driving the power companies out of business. While some of us may smile at this prospect, the sudden bankruptcy of large power companies would be disruptive.

The rebuttal from solar advocates is this: What Shugar said in 1989 is still true. Distributed generation reduces the power companies' costs by reducing the demand for power, especially during peak midday hours when solar collectors are producing energy. Therefore, the power companies have to spend less money building new generating plants and power lines. They can produce the energy they sell at a cheaper rate. If that's the case, there's no reason to pass along the “cost” of solar to nonsolar customers, since the cost is negative. Therefore, there is no existential threat.

Who is right? A study by energy consultant Tom Beach supported the solar advocates' argument. He found that distributed generation saves the power companies $92 million per year in Calfiornia and $34 million a year in Arizona. (Below is a political flyer based on the Beach study.) Of course, distributed generation does cost the power companies revenue, since every kilowatt hour produced by their solar customers is energy that they don't sell. Is it this competition that they object to?

Does it matter who is right? Probably not. Energy companies can lie about their costs, or they can use their superior spending power on campaign contributions and lobbying to render the science irrelevant.

Enter ALEC, an organization of corporations (including, of course, energy companies) and state politicians that produces model bills for conservative legislators to introduce at the state, and sometimes federal, level. It is ALEC that has given us such recent triumphs as stand-your-ground and voter ID laws. Legislators have introduced 77 ALEC energy bills in 34 states, intended to block the development of renewable energy at every stage. Bills have been introduced in Arizona, California, Colorado and Georgia to add a monthly surcharge to the electric bills of solar customers. Arizona has taken action. The original bill called for a monthly surcharge of $100 on solar collectors, which would have made them a huge money loser for consumers. They eventually settled on a fee that averages $4.90 per month. The solar companies are spinning this as a victory, but this added cost makes solar less attractive to homeowners.

Other energy initiatives pushed by ALEC include bills to eliminate state Renewable Portfolio Standards, which require utilities to produce a percentage of their power using renewable energy; and a federal bill to strip the Environmental Protection Agency of the power to regulate greenhouse gas emissions. The ALEC legislative agenda is not just about deny women access to abortions or denying black people the right to vote. It also strikes at the continuing ability of this planet to support human life.

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