News Flash! The more electricity generated from renewable sources, such as solar, the less need there is to “build big new power plants and transmission lines.” Yes, that’s exactly the point of why this country should invest in solar technologies, and why many consumers already have invested in solar panels for their homes and businesses. “Going solar” saves consumers money.
In theory, that is.
What’s the problem?
When rates are tied to profits, using less electricity means a lower cost to consumers and lower profits for utilities. Some utilities are trying to recoup some of those losses by eliminating some of the incentives to consumers that encourage the switch to renewable sources of energy. Some utilities claim that there is a certain fixed cost to maintain the overall energy infrastructure system, and that solar customers are not paying their fair share.
Well, here is an idea…instead of lamenting about a problem that seems outdated in today’s reality, utilities should accept the fact that solar panels have gone mainstream now that they are being sold at IKEA, and embrace a new business model. Rate decoupling would “decouple” utility rates from sales, eliminating the incentive that utilities have to sell more energy. This 101 does a good job of explaining the issue, and the map shows that many states have already gone down this path.
The National League of Cities does not have a position on whether states should allow for decoupling, but there certainly can be benefits in the long run to cities and consumers, not to mention the environment. Doing so is a positive way to bring more renewable energy to market and to promote energy efficiency — both of which NLC actively supports.
About the Author: Carolyn Berndt is the Principal Associate for Infrastructure and Sustainability on the NLC Federal Advocacy team. She leads NLC’s advocacy, regulatory, and policy efforts on energy and environmental issues, including water infrastructure and financing, air and water quality, climate change, and energy efficiency. Follow Carolyn on Twitter at @BerndtCarolyn.