Intentional Inflation of Costs of Renewable Energy
The need to move on to renewable energy sources and away from carbon emitting fossil fuels is clear. Whether climate change, or even just air quality , there are ample environmental reasons to push the move towards greener renewable energy sources that cannot be argued. For those that would still try to argue the need then I could make dozens of economical reasons to support the shift. Look at Iceland’s model of renewable energy usage to push an economy through its use of geothermal energy before claiming that green energy will not work on a large scale. The entire country is powered with 100% renewables at a fraction of the cost that we produce energy in the US.
Conservation Threatens Profits of Utilities
Utilities sell energy to the public. Like any business, if their customer base can get their product cheaper somewhere else or need less of their product than they sell less and their profits erode. All of the solar water heaters and wind turbines being installed in individual homes as well as the larger scale solar panel installations of big box chain stores like Walmart are starting to have an impact.
The scale of this impact is made clear in a report released by Edison Electric a year ago that lists renewable energy as a “Disruptive Challenge to Profits” and details a strategic plan to negate the erosion of profits being caused by the increased use of home based renewable energy. This report can be found in its original form at EEI.org .
Changing the Price Structure
In addition to the planning on ways to subvert efforts at switching to renewable energy by the public, they have redesigned price structures to penalize both consumers that elect to purchase green energy from them and pay a premium for that energy (on your utility bill you have the option to select green energy for a few cents per kwh more even though the utility company does not need to verify its actual costs are higher- this is the highest profit margin electricity most utilities sell).
Another new method being widely employed to thwart conservation efforts is the use of increased “basic service fee” or “delivery fees”. These are charges that are added to the bill of the customer regardless of the amount of energy used by the customer. What this means is even if you change all your light bulbs to low energy LED lights or compact fluorescent lights, and use other methods to reduce your total energy consumption, your bill will stay the same. You use fewer kwh of electricity but they have increased fees to maintain the same cost on a per bill or per customer basis.
Further, higher fixed fees increase the cost per kwh MORE for lower consumption customers. A customer using a lot of electricity divides the fee over many many kwh to derive there actual cost per kwh - the less electricity used the higher these fees push the per kwh costs. This negative incentive to conservation efforts is wide spread and growing and leads to the legitimate feeling of consumers that conservation efforts never deliver the end results promised.
Getting Government, Business, and Consumers to Work Together
The method to ending these type of practices is to get everybody working together. Instead of fees and charging higher costs, encourage the use of localized solar and wind turbine energy collection by supporting the use of grid tie inverters to feed energy back into the system at a very low cost and allowing the utilities to resell that low cost energy to other consumers. While this is allowed, it is not encouraged by the current programs in place.
An example of how the government can push cooperation between business and the public can be found in the Green Deal Initiative from the UK. In this program, while funding and rules are maintained by the government, actual implementation of the Green Deal is arranged directly between a business and the consumer. Contrast this to how we pursue the initiatives here by telling a consumer they will receive a tax credit in a year with no guarantee of energy savings actually resulting.
About the author- Reuben holds degrees in Marketing and Public Administration. His career path has included consumer financial management and private business management training and consulting. His passion is promoting an environmentally sound business ethos and planet.