Disruptive Deceptions: How #Electric_Utilities Stifled Rooftop Solar RSS Feed

Disruptive Deceptions: How Electric Utilities Stifled Rooftop Solar

In January 2013, the Edison Electric Institute, an investor-owned electric utility trade group based in Washington DC, published a report describing the financial risks posed by distributed energy resources for electric utilities and recommending several strategies for managing them.

The report, Disruptive Challenges, served as the opening salvo in what has become a sweeping national campaign to roll back net-metering policies that promote rooftop solar.

“Revising utility tariff structures, particularly in states with potential for high DER adoption, to mitigate (or eliminate) cross subsidies and provide proper customer price signals will support economic implementation of DER while limiting stress on non-DER participants and utility finances,” wrote Peter Kind, a former investment banker who wrote the report for EEI. “This is a near-term, must-consider action by all policy setting industry stakeholders.

The analysis is loaded with Orwellian turns of phrase like the claim that eliminating net-metering would “support economic implementation of DER.” This is shamelessly misleading, but it is not demonstrably wrong.

The same cannot necessarily be said for other claims made in the report. In particular, the history of utility credit ratings suggests that Kind mischaracterized the risks posed by what he called a “vicious cycle” induced by customer adoption of distributed generation.

“After five decades of decline in industry credit quality . . . [t]he industry cannot afford to endure significant credit quality erosion from current ratings levels without threatening the BBB ratings that are held by the majority of the industry today,” wrote Kind. “Non-investment grade ratings would lead to a significant rerating of capital costs, credit availability, and investor receptivity to the sector.”

This kind of scenario is what keeps utility regulators awake at night. And for good reason.

Read full article at Forbes