Why is Electricity So Expensive?
We can complain all we want about the absurdly high price of electricity, but this situation is likely to persist for two reasons.
First, electric companies are government-sanctioned monopoly utilities. There is usually only one electricity supplier, just as there is one water and natural gas supplier. Telephone services — and phones themselves — used to be a monopoly; it took years of legal battles leveraging the Sherman Antitrust Act to break the telephone monopoly. Now there is a competitive market for phone services and handsets, just as there is the potential for a free and competitive market for electricity.
Second, the cost of electricity is primarily affected by the local cost of living; factors such as electric company wages, real estate costs, taxes, etc. So locations with a high cost of living — such as Hawaii, California and New York — have high electricity prices. And these high electric prices are likely to persist without some magical solution.
Speaking of magical solutions, it’s not practical to drill a well in your back yard for your own natural gas or water, but I can imagine a future in which you could generate your own electricity. How are the existing monopoly electricity providers reacting to this reality in which customers can produce their own less expensive electricity?
Please listen up to this week’s Energy Show as we delve into the reasons why electricity is so expensive — and how things are changing as solar, storage and better public policies are rolled out.
You just invested in a brand new EV charged by your rooftop solar and battery. Then, a year later, your utility adds a $50/month fixed charge to your bill just because you have rooftop solar. How would you feel? This scenario is not just hypothetical. Utilities all over the country are lobbying to change rates for solar and battery customers by adding large fixed fees, eliminating net metering, delaying interconnections, and deliberately mismanaging incentive programs.
This anti-competitive behavior should be no surprise. Businesses don’t like competition; it hurts their profits. Homes and businesses can generate electricity for much less than their utility charges. So rather than find ways to be more efficient, competitive and environmentally friendly, utilities spend hundreds of millions of dollars suppressing competition from rooftop solar and battery storage and diminishing your solar and battery storage rights. To add insult to injury, the money they are spending was collected from ratepayers. You!
Unfortunately, the solar and storage industry doesn’t have the bankroll to counteract these utility lobbying efforts. But what we do have is public support: polling shows that 95% of people support solar and battery storage. The Solar Rights Alliance was founded to convert the support of millions of solar and storage enthusiasts into action that will change these anti-competitive, environmentally-hostile policies. The Solar Rights Alliance operates under the premise that everyone should have the right to generate his or her own power directly from the sun, and that no monopoly company or special interest should try to block or “own” the sun.
My guest on this week’s show is Dave Rosenfeld, the Executive Director of the Solar Rights Alliance. He’s spent his career building movements and institutions that expand freedom, liberty and justice — including National Public Radio, the Public Interest Research Group and the Public Interest Network. Please listen up to this week’s Energy Show as Dave and I discuss the issues that the Solar Rights Alliance fights for every day to protect your solar and battery storage rights.
Hold onto your seats because this is going to be the most exciting Energy Show I’ve ever done. This week we are talking about … DRUMROLL … your PG&E electric bill.
Modern utility bills are a masterwork of corporate obfuscation (Wikipedia: the obscuring of the intended meaning of communication by making the message difficult to understand, usually with confusing and ambiguous language). Indeed, there should be a picture of a PG&E electric bill on Wikipedia for illustration purposes.
Rather than trying to figure out their electric bill, most people’s eyes glaze over — they just write a check or click on Bill Pay to get the offending document out of their inbox. Almost every one of us could be paying an extra $10 or more a month and we would never know. Fortunately, the PUC (that’s a Three Letter Acronym for Public Utility Commission) tries to ride herd on overzealous utility rate makers.
Most mortals can understand charges per kWh — and solar customers understand NEM. But it helps to have a Master’s Degree in TLAs to understand the meaning of charges such as NBC, IOU, CTC, PCIA, CCA, DWR and PPP. As well as the myriad of whacky charges, confusing terminology, cross billing, negative credits, random taxes and alphanumeric rate soup.
Here is a summary of my handy Utility Bill Dictionary to aid in explaining some of these TLAs:
NBC – not the peacock network, but charges that solar customers pay because everybody does not have solar
IOU – big, profitable utilities that should be renamed U owe Them.
CTC – charges to all customers because utilities built power plants that are no longer needed
PCIA – charges to certain customers because utilities signed contracts for power at above market rates
CCA – efficient and low-overhead municipal-type utilities that sell electricity for much less than IOUs
DWR – charges to customers to cover PG&E’s first bankruptcy in 2001. These charges should end in 2020 at about the time PG&E’s new bankruptcy charges will hit our bills.
PPP – charges to fund public benefits, including solar incentives, low income assistance, and utility ads telling us to get a flashlight when they cut off our power
So be sure to listen to this week’s Energy Show as we delve into a typical solar customer’s PG&E electric bill and attempt to explain it on a page-by-page basis.
Almost everyone in California is aware of the Public Safety Power Shutoff Program — when the utility turns off power to customers in large areas in an effort to reduce the risk of fires caused by utility lines. In October of 2019 the first series of these power shutoffs began, inconveniencing millions of homes and businesses. These shutoffs were effective in preventing fires in areas that the power was off, but ironically a number of fires were still caused in areas that the power remained on.
California utility companies begin Public Safety Power Shutoffs (PSPS) when dry conditions and typically high winds with gusts up to 60-70 mph are forecast. These high winds often blow down utility lines or cause nearby trees to come into contact with wires — causing fires. Because long distance transmission lines are often the cause of these fires, power shutoffs can affect customers hundreds of miles away from where high winds occur.
During one of these recent power shutoff that affected my neighborhood in San Jose, it was a beautiful sunny day with calm winds. But five miles away at the top of Mount Umunhum the winds were blowing at 60 mph. There were no local fires, but there was a tremendous amount of anger at PG&E. Utility field workers were out in force trying to address issues that were caused by decades of mismanagement. Please don’t get angry at PG&E workers with a tool belt; be mad instead at PG&E employees wearing ties.
Utility blackouts are the new normal. PG&E’s CEO expects that this situation will persist for ten years and could take hundreds of billions of dollars to prevent — mostly by upgrading transmission and distribution systems. But there is a better way: installing more local solar and storage so that we are not as dependent on a centralized grid, and we can more easily ride through power interruptions.
But an ordinary rooftop solar power system does not operate in a blackout. For safety reasons the inverter automatically shuts down if utility power goes out. A special inverter and battery is necessary so that your solar system will operate independently of the grid — often referred to as a micro grid or island mode operation. Homes and businesses that installed a solar power system with battery backup generally had no problems during these blackouts. Properly designed battery systems automatically transfer to backup mode and power the critical loads in the house from the battery at night and solar during the day.
To learn more about Public Safety Power Shutoff programs — and the best way to design a solar + battery storage system to ride through the next blackout — please tune in to this week’s Energy Show.
PG&E, our local utility in Silicon Valley, caused a number of wildfires — including the recent Camp fire that destroyed the town of Paradise, killed 86 people and destroyed over 13,000 homes.The primary reason for this and other similar fires is that PG&E skimped on power line maintenance while enjoying record profits. Now they are bankrupt (again), and are scrambling to deal with the upcoming wild fire season.
Public Safety Power Shutoffs may happen far from fire danger areas. And these shutoffs could last for 48 hours or longer. So anyone relying on electricity for the necessities of life must prepare for an extended outage. Unfortunately, their recommendations ignore the cleanest, cheapest and safest backup power solution – solar and battery storage. Instead, PG&E recommends gas generators and stockpiling several days of fuel. Dumb idea to store all this extra fuel in fire-prone areas. Not to mention the challenges of connecting, starting and operating a gas generator safely.
Here is the letter that PG&E sent to my home:
Given the growing threat of extreme weather, we want all of our customers to be prepared for power outages. If elevated weather conditions, including potential fire risk, threaten a portion of the electric system serving your community, it will be necessary for us to turn off electricity in the interest of public safety. This is called a Public Safety Power Shutoff. We know how much our customers rely on electric service and want to work together to help you prepare for power outages.
A Public Safety Power Shutoff could impact any of our more than 5 million electric customers, including your home or business. Because elevated weather conditions can last several hours or days, we suggest preparing for outages that could last longer than 48 hours. Electric backup generators can keep the lights on, help appliances stay running, preserve perishable foods, and power essential equipment and electronics during a power outage.
Generators can also pose safety hazards, so it is important to understand how to safely operate your generator before an emergency occurs. This means doing regular safety checks and being sure you have enough fuel to last a few days.
As you can see from their letter above, PG&E recommends a gas generator for backup power (remember, the “G” in their name stands for “GAS”). No mention at all about using a cleaner, cheaper, quieter and safer battery backup system. Simple reason: they don’t want you to install solar or batteries since that reduces their revenue and profits. And if you buy an automatic natural gas generator they’ll make even more money selling you natural gas.
So Listen up to this week’s Energy Show as we discuss your options for dealing with these Public Safety Power Shutoffs — as well as considerations for selecting the best battery backup system to protect you and your family during these outages.
Studies show that electrifying our transportation and building sectors are the fastest ways to reducing greenhouse gas emissions. These sectors combined generate nearly 70% of total greenhouse gases in many states, including California.
Our country is making excellent progress in the transportation sector as electric vehicles replace conventional gas vehicles – which generate zero emissions when powered by solar- and wind-generated electricity. Since trucks and buses are larger, it will take a few more years before electrification of these vehicles becomes commonplace. Nevertheless, since average vehicles are on the road for about 10 years, it is entirely feasible to completely electrify California’s vehicles in 10 to 20 years. Without national leadership, this transition will take longer in the rest of the country.
25%of green house gas (GHG) emissions come from the building sector – mostly heating, cooling and lighting. When many buildings were constructed they were heated by fossil fuels, most commonly natural gas for both space heating and water heating. With new heat pump technology it is actually cheaper to heat and cool a building with electricity – resulting in zero GHG emissions if this electricity is generated by solar or wind. Other GHG savings measures — such as LED lighting, better windows and insulation, electric ovens, induction cooktops, and better building controls – are also relatively straightforward to implement.
For new construction, it is easy to build these more efficient and cost effective solutions in. But just in the state of California it will take 50+ years for the approximately 12 million existing single family homes 3 million apartments and 700,000 commercial buildings to completely change over to these new technologies.
Unfortunately, we don’t have 50 years to make this transition – more like 10-20 years if we want to prevent global temperatures from rising more than 1.5 degrees C. On the surface, the key barrier to making this transition is the cost for new vehicles and the cost to retrofit existing buildings. New buildings are relatively easy since building electrification is actually cheaper than space and water heating with fossil fuels.
The real barrier to this transition in existing buildings is the stubborn and selfish attitude of incumbent fossil fuel industries. Architects, builders and contractors are happy to install appliances powered by electricity instead of natural gas. But fossil fuel providers, including gas utilities, oppose these electrification efforts at every opportunity. Just consider the extra costs your utility adds to upgrading your electric service and removing your natural gas connection. Please Listen Up to this week’s Energy Show as we discuss solutions to removing these barriers to building electrification.