Free Energy...we''ll tax that.
December 4, 2013 3:30 PM   Subscribe

ALEC calls for penalties on 'freerider' homeowners in assault on clean energy. The American Legislative Exchange Council commonly know as ALEC which raises over 90% of its funds from corporate backing is associated with the Dominionists web. Wisconsin State Rep. Chris Taylor caught a glimpse of the ALEC Nation a Climate Denial Machine. A little more.
posted by adamvasco (59 comments total) 11 users marked this as a favorite

 
ALEC facing funding crisis from donor exodus in wake of Trayvon Martin row
posted by localroger at 3:35 PM on December 4, 2013 [3 favorites]


They are going after their own. It's nice to see a group that's outlived its own hubris deciding to show itself the door.
posted by parmanparman at 3:38 PM on December 4, 2013


"How are they going to get that electricity from their solar panel to somebody else's house?" he said. "They should be paying to distribute the surplus electricity."

I desperately want to believe this is satire.
posted by aubilenon at 3:39 PM on December 4, 2013 [7 favorites]


They want to tax sunlight? Seriously?
posted by octothorpe at 3:43 PM on December 4, 2013 [3 favorites]


Ya know, most of the time I tend to give groups like ALEC the benefit of the doubt, simply thinking of them as whacked-out acolytes of uber-conservative philosophy.

Stuff like this reminds me that they're deliberately evil.
posted by Ickster at 3:49 PM on December 4, 2013 [14 favorites]


"How are they going to get that electricity from their solar panel to somebody else's house?" he said. "They should be paying to distribute the surplus electricity."

I'll pay a maintenance fee on lines to my house, sure.

Since these people are clearly starry-eyed idealists only looking out for the purity of the free market, as the sole provider of My House's Sunlight™-Brand electricity, I also get to set the rate for my 100%-organic, free-trade electricity. $1000 per kWh should do the trick. And then I'll have the government pass laws that protect my profits and business model. It's the American way.
posted by chimaera at 3:50 PM on December 4, 2013 [30 favorites]


That Simpsons episode was not supposed to be a how-to.
posted by Artw at 3:51 PM on December 4, 2013 [1 favorite]


I'm sorry. I just tried to read that guardian link.
I'm finding it hard to believe this isn't some weird hoax.

I can understand needing to fund the infrastructure. but maybe I don't understand how solar works. does all the solar energy go back into the grid before it's used by the house the panels are attached to?
if not, then what infrastructure are they using this guy thinks these "free riders" should pay for?
posted by sio42 at 3:58 PM on December 4, 2013 [1 favorite]


Presumably if you unhook your solar from the good and use the spare energy to, say, electrocute small animals you get a tax credit? Maybe you could burn some tires in an oil-drum as an offset?
posted by Artw at 4:04 PM on December 4, 2013 [4 favorites]


Most solar installs these days are set up with net-metering. So all the energy generated goes out the wires into the grid, and the meter keeps track of how much. Our inbound use remains the same.
posted by Windopaene at 4:09 PM on December 4, 2013 [2 favorites]


what infrastructure are they using this guy thinks these "free riders" should pay for?

Powering your house at night when the sun isn't out. Barely any home solar arrays come with battery banks for powering the homes after dark; installing those as well would at least double the price. Instead, solar families usually push electricity into the grid during the day and pull it down at night.

As I said last time, if you don't think you should have to pay for the infrastructure, by all means cut the utility wires and install a 20KWh battery pack, see how you like paying for that instead.

Not that the issue benefits from ALEC's assholish meddling, of course.
posted by Joey Buttafoucault at 4:10 PM on December 4, 2013 [2 favorites]


does all the solar energy go back into the grid before it's used by the house the panels are attached to?

Houses with smart meters and solar panels often produce more electricity than they use (especially during the day when the occupants might not be home), so they get to sell the excess back to their local power company. I guess ALEC's argument is that this is unfair because sending power back makes the lines wear out faster or something. But that sounds pretty dumb if you ask me.
posted by Kevin Street at 4:12 PM on December 4, 2013


As I said last time, if you don't think you should have to pay for the infrastructure, by all means cut the utility wires and install a 20KWh battery pack, see how you like paying for that instead.

So what you're saying here is pay forever or pay once? Solar panel installation isn't exactly within reach of most homeowners, and not at all in reach of those who rent. If I were one of those who could afford such an installation, I'd gladly snip the wires and pen a short note telling the utility company to go fuck itself.
posted by IvoShandor at 4:14 PM on December 4, 2013 [2 favorites]


if not, then what infrastructure are they using this guy thinks these "free riders" should pay for?

I haven't read any of the links, which in a perfect world would disqualify me from commenting. But I imagine the idea is that 1) many solar users do still pull energy out of the grid at night, and 2) the true cost of being connected to the grid consists of a fixed cost for maintaining the grid plus a variable cost for the amount of energy actually being used. Existing billing by utilities probably simplifies this into just a slightly higher variable charge. But this billing model breaks down if a large enough percentage of customers drop their usage and therefore aren't paying their "fair" share of the fixed cost.

Of course, we're nowhere near that kind of saturation for solar, so this feels like preemptive assholery.
posted by Slothrup at 4:16 PM on December 4, 2013 [4 favorites]


I read the link and was about to say what Slothrup said.
posted by kiltedtaco at 4:17 PM on December 4, 2013 [1 favorite]


I need to learn to use the preview button. Sorry, Mr. Buttafoucault.
posted by Slothrup at 4:17 PM on December 4, 2013


Of course, ALEC's stance here isn't about the intricacies of net metering and the preservation of the money involved to maintain the grid, or they would be advocating for the electrical companies to properly distinguish in their fees what are the costs of grid maintenance vs. a kwH. This is about preserving the profits of the oil and gas companies, plain and simple.
posted by Inkoate at 4:22 PM on December 4, 2013 [17 favorites]


Yeah, they want to make solar power more costly, and asserting that some homeowners are getting something for nothing is their way of doing it. I wonder if the Arizona $5 monthly charge still applies to homes that aren't hooked up to the grid.
posted by Kevin Street at 4:24 PM on December 4, 2013 [1 favorite]


My jaw dropped so hard that it has literally fallen off and now I can only communicate in text.
posted by His thoughts were red thoughts at 4:33 PM on December 4, 2013 [8 favorites]


There is a case to be made for additional infrastructural costs if solar gets deep penetration. There have been studies that suggest that the grid as its currently constructed could start to have stability problems if, for example, a cloud drifts over a neighborhood where 10% to 20% of the homes suddenly start pulling instead of pushing power. That's a real problem which will need to be solved, and which should be because rooftop solar is one of the most practical near-term ways to drop both our energy budget and carbon footprint.

But as inkoate suggests, ALEC cares nothing about these relatively minor real problems. Their problem is that every kilowatt-hour you pull from your roof is seven cents out of someone's pocket who thinks they own you fair and square as a captive customer, and the thought of such deep penetration as solar cells get cheaper and economies of scale make the grid-interface inverters cheaper, scares the living bejezus out of them.

In a lot of places cleanly cutting the wire is not an option because a house that doesn't have a grid hookup is not code compliant and "uninhabitable," even if it has a solar array, wind farm, and geothermal tap. However, it would be possible to make one's solar invisible to the grid by connecting it only during times of excess production and completely switching away from the grid, instead of selling the excess. You could get away with a much smaller than usual battery pack for tiding it over short interruptions. Not as effective as selling the excess to the utility but much simpler and less to whine about on the utilities' part. I suspect their next suggestion would be inspectors going about looking for "rogue" solar panels.
posted by localroger at 4:36 PM on December 4, 2013 [5 favorites]


This is a great excuse to create more municipally-owned electric light companies.
posted by RonButNotStupid at 4:40 PM on December 4, 2013 [2 favorites]


"As it stands now, those direct generation customers are essentially freeriders on the system. They are not paying for the infrastructure they are using. In effect, all the other non direct generation customers are being penalised," he said.

And as a solar supplier, the power companies are essentially freeriders on my system: Power companies have to plan for new generation based on peak use, which (at least here in the southwest) happens when everybody has their air conditioners on. But that's exactly when grid-tied solar home installations are generating, buffering them and actually delaying their infrastructure expenditures.
posted by Killick at 4:51 PM on December 4, 2013 [9 favorites]


Most municipally owned utilities don't own generation. The biggest issue with net metering is that it changes the economics on large scale thermal and hydro generation. Basically because it isn't always sunny and it isn't always windy you need lots of this lind of generation as back up. Much of that generation is designed to run 365x24 and can't be throttled up and down and the prices the utilities are allowed to charge assume some reasonable levels of production relative to history. Net Metering blows that up and the utilities don't make enough money to reinvest. So its a real issue. But its actually pretty solvable w/o disincentivizing renewables. Capacity payments and allowing the utilities to recapture the cost of stranded assets via tariffs over time.

Tl; Dr - this is actually a real issue but the Alec solution is not very intelligent.
posted by JPD at 4:55 PM on December 4, 2013 [5 favorites]


It's like ALEC asks themselves "what would an evil villain do?" in every given situation. You can say it's just about money, but surely nothing stops them from investing in solar, and then there's the push against women's reproductive rights that seems to have no clear profit motive. Just evilness.
posted by emjaybee at 4:55 PM on December 4, 2013 [4 favorites]


The problems with this aren't in the peak. Its in the mid merit and baseload.
posted by JPD at 4:55 PM on December 4, 2013


Of course, we're nowhere near that kind of saturation for solar, so this feels like preemptive assholery.


Very pre-emptive. While in the end we will end with a power fee structure that starts with a flat fee plus a perkwh fee, it's worth noting that there is more than one way to do that. Municipal lines for the last mile? Conventional utility company? Competing companies offering multiple options for hookups?

ALEC should be nowhere near the decision making there.
posted by ocschwar at 5:01 PM on December 4, 2013


Germany is already there and its a problem
posted by JPD at 5:05 PM on December 4, 2013


seven cents out of someone's pocket who thinks they own you fair and square as a captive customer, and the thought of such deep penetration as solar cells get cheaper and economies of scale make the grid-interface inverters cheaper, scares the living bejezus out of them.

Yeah but don't forget they own you because they agreed to give up pricing control to the government in exchange for being guaranteed a reasonable return. The problem is that the regulatory structures haven't evolved to adjust and all of a sudden the best return they can earn is a lot less than they were promised.
posted by JPD at 5:11 PM on December 4, 2013


the true cost of being connected to the grid consists of a fixed cost for maintaining the grid plus a variable cost for the amount of energy actually being used. Existing billing by utilities probably simplifies this into just a slightly higher variable charge.

In states that have electricity deregulation and competitive markets, this is already how you get billed. It's also the way you get billed for your traditional telephone service (if you have any, anymore).

At least in Pennsylvania, which has a deregulated electricity market, your electricity bill has two parts: the "generation" amount, which is per-kWh, and a "transmission" amount. That transmission amount might also be per-kWh or it could be fixed, I'm not entirely sure. But they are already definitely separate. This is how you perform the accounting trick of 'changing' electricity suppliers: you can change who you buy power from, which may alter the generation amount, but you can't choose who runs the infrastructure that brings it to your house, so the transmission fee remains the same regardless. (At least such is my understanding.) If you want to buy green power from a wind-energy provider, they're pumping it out onto the same grid as the ancient coal-burner down the road; it's all a matter of accounting how they get paid and by whom, and at what rate. You should be able to apply the same thing to net-metered domestic solar installations.

So if we were to take ALEC's complaints at face value -- not that I'm really suggesting that anyone do that, but just as a hypothetical -- the solution is to pay solar energy-generating homes only the "generation" amount for their power, but not the sum of both the generation+transmission amounts. For the power they consume from other sources, they would have to pay both generation+transmission (since the power is generated elsewhere). Other people who consume power that the solar household generates pay generation+transmission, so the grid operator makes the "transmission" amount on every kWh.

That doesn't strike me as totally unfair on its face, but I think it's what many states are doing already, unless I totally misunderstand how net metering in deregulated markets works.

It would also have the advantage of encouraging solar homes to use electricity they produce themselves rather than just pumping out electricity when they're not home and using the grid heavily when they are. This might create more of a market for storage batteries and other energy-storage appliances (like thermal-storage heating units and water heaters) than there currently is in the US.
posted by Kadin2048 at 5:13 PM on December 4, 2013 [5 favorites]


Last time I checked, I paid for that wire from my house to the company transformer.
posted by mikelieman at 5:32 PM on December 4, 2013 [2 favorites]


Esquire's always delightful Charles Pierce on The Guardian's reporting on ALEC. Apparently The Guardian aquired a buttload of ALEC documentation...

"Nobody has any excuse any longer. Reporters -- local and national -- no longer have any excuse to treat ALEC and its work product as anything more than corporate-funded propaganda designed to exist outside the imperatives of democratic self-government...

...the "draft agreement" by which state legislators agree to be big old 'ho's for the people who run ALEC -- should be politically suicidal. It's long past time to ACORN these bastards in the public mind."

posted by Cookiebastard at 5:38 PM on December 4, 2013 [4 favorites]


The problems with this aren't in the peak. Its in the mid merit and baseload.

I don't see how this is a baseload problem. 100% of your customers are back on the grid like normal at night, so there's no decrease in the night-time load and the utility is still getting dollars for those kilowatt hours at the times when it's cheapest for them to produce. I would think that utilities would be happy to shed whatever peak load they could, even if only in irregular patterns, and those plants shouldn't have a problem with irregular usage.
posted by kiltedtaco at 5:46 PM on December 4, 2013


My children deserve to live someplace better than the country this place is becoming.
posted by Fuka at 5:50 PM on December 4, 2013 [9 favorites]


Its not night time its days where you never approach peak. Peaking capacity runs less than 10% of the time. Look at how its impacted load factors in Germany for example.
posted by JPD at 6:08 PM on December 4, 2013


Germany is already there and its a problem


Germany is having the same problem that's always happened when there's major infrastructure work. The same things happened many other times in history, especially with the initial buildout of America's train network and electric grid: instead of building something, the smart money waits for someone else to do it, get overleveraged, and go bankrupt, and then buy his stuff for pennies on the dollar.
posted by ocschwar at 6:12 PM on December 4, 2013 [3 favorites]


They want to tax sunlight? Seriously?

the devil walks the earth
he only cares for money
see what he’s done, good lord
it sure ain’t funny
he wants to own the world
the water and the air
he wants to call what is, and brother,
what is not your share
your share
your share
posted by flapjax at midnite at 7:59 PM on December 4, 2013


"As it stands now, those direct generation customers are essentially freeriders on the system. They are not paying for the infrastructure they are using. In effect, all the other non direct generation customers are being penalised," he said.

These are the same people who believe that no one should have to pay anything for healthcare until they show up at a hospital, which has magically built and maintained itself and can offer the best of care out of thin air.
posted by oneironaut at 9:11 PM on December 4, 2013


On the ne hand, I can see the point about paying for infrastructure. On the other, much bigger hand, we need to encourage the conversion to solar for so very many reasons. So I say yeah, avoiding a utility line tax for solar generators seems like a good thing.

Now if only I can get the same deal when i install my backyard nuclear power plant.
posted by happyroach at 11:09 PM on December 4, 2013


See the problem with them coming to get my money is that they have to get my gun first. This becomes one big conservative recursion error.
posted by salishsea at 11:12 PM on December 4, 2013 [3 favorites]


What if it was actually an electricity gun that fired "energy bullets" into the grid? Then they would be completely powerless.
posted by Artw at 11:40 PM on December 4, 2013 [3 favorites]


Inkoate: "Of course, ALEC's stance here isn't about the intricacies of net metering and the preservation of the money involved to maintain the grid, or they would be advocating for the electrical companies to properly distinguish in their fees what are the costs of grid maintenance vs. a kwH. This is about preserving the profits of the oil and gas companies, plain and simple."

Worse, in somewhere between many and most states, net metering in the sense they are trying to outlaw doesn't exist in the first place. In many states, for example, your generation can only offset the generation component of your bill. You still pay full freight for the distribution charges. In others, the power company pays nothing if you generate surplus electricity or credits you the bulk price they pay rather than offsetting your usage at the same rate you would have paid in the time period the excess generation occurred. In a few states, there is no reasonably priced way to have a grid tied renewable system at all, much less get paid for what you generate.

The free ride they imagine doesn't actually exist except in their nightmares, yet here they are proposing legislation against them. Next they'll try to outlaw somnolence because they can't have nightmares if nobody sleeps.
posted by wierdo at 12:19 AM on December 5, 2013 [4 favorites]


Every power or gas bill I've ever paid in Vancouver, Whistler, Beijing or Toronto has been separated into a flat infrastructure or delivery charge and a metered usage component. Weirdo confirms for me above my suspicion that that this supposed free ride is a fever dream of these bugfuck malevolent twits.

This smacks of a bunch of climate denier waterboys for dinosaur utilities who want the public to pay them not to operate obsolete oil and coal peaker plants like some kind of New Deal farm bill for ossified energy conglomerates.
posted by [expletive deleted] at 4:37 AM on December 5, 2013 [4 favorites]


This is about preserving the profits of the oil and gas companies, plain and simple.

I don't think it's even this anymore. It's like they were sitting in a meeting and someone said, "Okay, so what sorts of things to liberals want?"

"They want to encourage green energy!"

"Great, what can we do to discourage that?"

They just want to block or counter the liberal agenda no matter it is.
posted by VTX at 5:55 AM on December 5, 2013 [2 favorites]


Germany is having the same problem that's always happened when there's major infrastructure work. The same things happened many other times in history, especially with the initial buildout of America's train network and electric grid: instead of building something, the smart money waits for someone else to do it, get overleveraged, and go bankrupt, and then buy his stuff for pennies on the dollar.

uh no. not at all. this isn't about new investments made by the utilities at all. Its about old investments being made for a system that has been disrupted and incentive regimes for solar having unintended consequences with respect to back up capacity.

Long term they need to close a whole lot of coal capacity and replace it with technologies that are more flexible - there is about 70 years of investment in the current fleet and it can't turn on a dime.

Its a real problem - but the solution to it isn't "make solar uneconomic"
posted by JPD at 6:34 AM on December 5, 2013 [1 favorite]


and this really isn't a grid problem. Yes distributed generation requires investment - but the regime for paying for that is already in place.
posted by JPD at 6:37 AM on December 5, 2013



uh no. not at all. this isn't about new investments made by the utilities at all. Its about old investments being made for a system that has been disrupted and incentive regimes for solar having unintended consequences with respect to back up capacity.


Unintended? I doubt it. They've known abotu the need for redone transmission and distribution infrastructure all along.
posted by ocschwar at 7:10 AM on December 5, 2013


its not about T&D.
posted by JPD at 7:19 AM on December 5, 2013


Wiat? Are the electric companies paying the same for your extra electricity as they charge you to use it? Well that's dumb. they should be buying it wholesale, the profit on resale funds the infrastructure. Or am I missing something?

Also home Solar isn't the only green energy that is (or will be) taxed. Some states charge hybrid car owners a fee in lieu of the gas taxes that they miss out on.
posted by Gungho at 7:44 AM on December 5, 2013


Presumably if you unhook your solar from the good and use the spare energy to, say, electrocute small animals you get a tax credit? Maybe you could burn some tires in an oil-drum as an offset?

Giant Tesla coils on your roof sparking off the excess energy.
posted by jason_steakums at 8:45 AM on December 5, 2013 [1 favorite]


Also home Solar isn't the only green energy that is (or will be) taxed. Some states charge hybrid car owners a fee in lieu of the gas taxes that they miss out on.

This pisses me off. The federal gas tax is a pittance in the first place and hasn't been changed since the 90s. Seriously. You've been paying the same amount of federal gas tax for almost two fucking decades with inflation eating away at the purchasing power of the tax. No wonder the Highway Trust went broke.

The current fuel excise in Australia is the equivalent of $2.44/gallon. The UK it's the equivalent of $5.44/gallon. The TAX on a gallon of fuel in the UK is more than what I pay here in the fuel gouging capital of the US, the Bay Area.

Well shit, I wonder why we can't raise enough money to repair a broken highway system. Let's blame the hybrids.
posted by Talez at 8:54 AM on December 5, 2013


Gungho, I am paid whatever the current wholesale rate is for the utility, which was about 5 cents per kWh last I checked. My bill has a monthly "customer charge" for meter reading and costs associated with delivering energy to my house (which is where the 'infrastructure' bill rightly belongs anyway, so this whole thing is bullshit, but we knew that already because ALEC). This is the same charge that everybody else pays every month, and there is nothing physically different about my hookup than my neighbors' except for a net meter between my inverter and the telephone pole. They also pay me 12 cents per kWh for everything I generate, whether I use it or my neighbors do -- this is an incentive I have locked in until 2021 after which it disappears. (I think this has gone down quite a bit in the 4 years since I had my system installed.)

As more and more grid-tied solar is used, there are going to be costs associated with modifying the generating capabilities of power companies and the distribution infrastructure of utilities. There are going to be areas where they are going to save -- for example, I expect there will be fewer transmission losses as generation is more distributed -- and there are going to be areas where they will have to invest. And I fully expect that the Republican champions of the free market are going to whine continuously for the next 20 years, because nobody is thinking about the poor poor corporations. After all, they should be entitled to sell energy with virtually no responsibility for external costs, just like they always did. Anything else is socialism.
posted by Killick at 9:09 AM on December 5, 2013 [1 favorite]


Some forward-thinking utilities, like the one in my hometown of Austin, Texas acknowledge the infrastructure maintenance cost for the grid and reimburse solar customers at a lower rate than what is charged to receive power from the grid. At the same time, the city continues to offer rebates (not including battery systems) for those inclined to purchase and install solar panels. I imagine this is a growing trend, particularly in the south.

These efforts by ALEC are clearly aimed at propping up fossil fuel industries in the wake of growing use of renewables. Solar bling is still pretty inefficient, but this proposed interference in lieu of letting the marketplace sort this out is galling.
posted by SenorJaime at 9:12 AM on December 5, 2013


Some states charge hybrid car owners a fee in lieu of the gas taxes that they miss out on.

The Virginia version of that tax really has nothing to do with hybrid cars per se; it just happens to use hybrid cars as a proxy for "rich, white yuppies from Northern Virginia". And it's only $64, which isn't significant as a revenue source. It's just a side order of 'fuck you' from Richmond to the DC suburbs, plated alongside road funding in a way that wasn't possible to separate.

It would be unfortunate if anyone used that as precedent for actual energy-tax policy, because it's really a very regional urban/rural and high-income/low-income issue. My guess is that if you scratch the surface of other states with similar laws it's the same deal, although I'm only intimately familiar with VA's.

I firmly believe that if they could have put a tax on organic vegetables or "beer that doesn't end in -weiser" they would have done that too, but couldn't figure out how to squeeze it into a transportation funding bill.
posted by Kadin2048 at 12:16 PM on December 5, 2013


JPD: "Capacity payments and allowing the utilities to recapture the cost of stranded assets via tariffs over time."

Capacity payments, yes. They are providing a valuable service by providing consistent base load capacity that is not adequately compensated for by the market price.

Stranded generation assets, no. Ratepayers already paid to build the damn plants in the first place in the case of regulated utilities, so why should they pay more because they don't want to use it? In the case of unregulated generators, that's called the free market. You win some, you lose some. With the opportunity for profit comes the risk of loss. It isn't government regulations driving the adoption of solar, it's simple economics.
posted by wierdo at 1:58 PM on December 5, 2013


I feel that its worth clarifying a few points about what you pay for when you pay for electricity from the grid. You are effectively paying for 4 things. Generation, i.e., to the person who owns the power station. Transmission, the high voltage wires. Distribution, which is the low voltage wires that connect the transmission network to your house via various step downs, and finally the supplier who buys from the generator and sells to you as a consumer. The supply company makes things easier for domestic consumers by giving a single price which covers these 4 functions plus any extras like their environmental commitments or other social goals (depending on where you live).

The cost of the G and S functions are a product of the variations in price that occur as demand varies on a daily, weekly, seasonal and annual basis. The costs charged to consumers in the Tx and Dx functions are calculated in different ways depending where you live. When you connect to a network you raise the cost of operating that network for the network operator. They will have invested capital to build the network and may have to pay more to connect a new generator or load. From the perspective of the DNO, a new power plant will affect the cost of operating and maintaining the network. This cost can, either partially or wholly, be paid for via a connection charge or in the use of system charge. A system with connection charging would mean if you connected a wind turbine you might have to pay all the costs of strengthening the network to take your capacity. If this applies 100% then you would not have to pay further costs (maybe maintenance in some places). If Use of System charges apply then the network owner pays for upgrading the grid but there is a cost associated with all the energy that goes into the grid. Either way, if you connect to the grid you have to pay to cover the costs of the grid.

The overall cost is largely based on units of energy that go into a network and units of energy that come out of a network. This is pretty typical in Europe and I would hazard the US system is not a million miles away. (Other factors might also be taken into account. In the UK if your power station is far from your consumers then the cost of using the grid is higher for each unit of energy you put in and each you take out.)

The total value of this figure is again factored into where the supplier decides to buy their electricity, cheaper electricity generated far away may be more expensive once the grid costs are taken into account. The customer (if so minded) can move to a cheaper supplier if one is available and the grid costs factor in this.

Anyway, the key thing here is, the consumer will eventually pay for what goes in and what comes out, its part of the service to you, as the consumer. You are essentially at the end of a value chain. However when you are producing from a solar panel and using the energy in your home you are largely not using the grid, so you have little or nothing to pay for. There is little justification for charging for the generation of solar you are using at home, since you are not gaining any value from the grid for this. If you generate electricity and send it into the network then the position is slightly more complex, but I cannot imagine there is a territory where it would not fall well within what is already covered by existing regulation.

Firstly, regarding transmission, if you are a small solar generator nothing you produce is likely to get near the transmission grid, so there is no justification for having to pay any costs at all as regards maintaining that grid.

Secondly, regarding distribution, if you have to pay the full costs of strengthening the distribution grid to take your power then you are effectively paying the costs of connection linked to connecting to a distribution grid and this means there is no additional cost to the network operator, so no further charges are justified. If the network operators pays the costs of upgrading the grid (which is probably more common, certainly is in Europe) then there is justification for Use of System charges for any electricity, and this should be secured in the final price that the DNO passes on to the supply company. Because DNOs spend their money on the upgrade then they expand their regulatory asset base and can pass on costs of doing so. Who they pass these costs to is the key issue. This does vary quite significantly from place to place, but what it typically does is assign costs based on actual network use. Some places do make some charge against the generators, but mostly (often totally) it is passed to consumers and if this is the case for large generators in a particular regulatory regime it is hard to see what the justification is for applying a different standard to a smaller generator.

There is another side to this however, with an actual real and possible free rider involved. Shifting power up and down through transformers and wheeling it across the country means energy is lost. In the UK (from memory) typically 7-9% of electricity entering the grid is lost, this can rise beyond 11% in peak times. Generating power on the distribution grid means less transformation is needed and there are less line losses. Realistically, for most people if you put your spare solar capacity on the grid the energy will not leave your neighbourhood. This offers a real benefit for the distribution network company, but in most places this kind of systemic benefit has not been monetised. So small renewables provide a benefit for which they do not get paid, and where the company that owns the wires does.

A shift to lots of generation on distribution grids is going to mean issues relating to asset management, especially for transmission networks. Less electricity will be going through the high voltage wires if we have lots of generation on the distribution grids, and this may mean higher costs to any power which does go through the high voltage wires. However, since most distributed generation power won't do this and this will get no benefit then its not free rider behaviour. People might ask, 'Well what happens if the sun goes in biffa? You need the grid then don't you? Well, yes, I do as a consumer. And if I need to draw power then I will have to pay for it including with the higher unit costs of using the transmission grid. And if the distribution grid also needs to charge extra then I will have to pay for that too. But that doesn't mean a generator should have to pay for something they aren't using.

One thing we have being hypothesising recently is whether you might end up in a situation where once you reach a tipping point for domestic renewables it might cause the network costs to be pushed up for power through the grid that it provides even more of an incentive for consumers to switch to their own power source and you get a bit of an acceleration effect. that remains to be seen though.
posted by biffa at 3:17 PM on December 5, 2013


Biffa US generation tariffs are mostly regulated even in "deregulated" markets. To be frank its a mess.

Weirdo you have to pay for stranded assets because that's part of the deal established in the legal precedents 80 Years ago or so that established regulation of
Legal monopolies a stranded asset is by definition one that has not been paid for.
posted by JPD at 3:57 PM on December 5, 2013


ALEC Opposed Divestment From South Africa’s Apartheid Regime
posted by homunculus at 8:54 PM on December 6, 2013 [1 favorite]


ALEC stands its ground
posted by homunculus at 8:54 PM on December 6, 2013


JPD: "Weirdo you have to pay for stranded assets because that's part of the deal established in the legal precedents 80 Years ago or so that established regulation of
Legal monopolies a stranded asset is by definition one that has not been paid for.
"

In theory, yes. Read David Cay Johnston's most recent book (I believe that is the one) for details on how theory and practice diverge. Basically, the regulated utilities often got paid for transferring ownership of the plant to a related entity owned by the same parent company, that parent company which is now seeking to get paid yet again for the same asset.

Utilities have a long history in this country of abusing the public trust. Unfortunately, the regulatory bodies don't in general have a good record of independence, transparency, or effective oversight to match.
posted by wierdo at 11:16 PM on December 6, 2013


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