Why the Hodgepodge U.S. Utility Industry Needs a Ma Bell
Troubled power companies are adapting, slowly, to the transformations roiling their businesses.
Last week, San Diego Gas & Electric agreed to meet with solar industry representatives and environmental groups to discuss a new system for compensating customers who have solar panels installed on their homes for the excess energy they generate and send back to the grid. In place for more than 20 years, California’s solar program provides incentives for customers who install clean energy systems, including retail rates for electricity they sell to the grid under the state’s net metering regulations. That program, however, has a built-in self-destruct mechanism: it will end in a utility’s service territory once solar power reaches 5 percent of local peak energy demand in the area.
San Diego is nearing that cap and could reach it early next year. The California Public Utilities Commission is working on an updated program, but it could be next summer or even later before new rules are in place. That has led to fears of a “solar gap,” when the absence of government-mandated net metering regulations could allow utilities to pay less for solar power and solar power companies could face a drastic drop in business. San Diego Gas & Electric executives have so far declined to commit to continuing under the present system once the government program lapses—leading to protests outside the utility’s headquarters, with crowds shouting “Don’t block our sun!”
Meanwhile, on the other side of the country, Princeton-based NRG Energy said in September that it will reorganize, creating a “Green Co.” that will house its clean energy business and leaving its traditional generation plants, mostly fossil fuel-powered, in their own unit. NRG CEO David Crane has been the most vocal utility executive championing renewable energy, and had bet the company’s future on an expanding portfolio of solar and wind assets—a strategy that, as last month’s announcement made clear, is now deemed a failure. Unmollified by the new plan, investors continue to flee the company: NRG’s shares have lost nearly half their value in the last three months, and Wall Street analysts have speculated that Crane could be ousted in the coming months.