The battle over the energy transition and the pace of renewable energy adoption is increasingly invading state capitals where some red state legislators are digging in their heels to protect legacy resource industries and investor-owned utilities under the existing monopoly regulatory model. North Carolina recently let the big investor-owned utility Duke Energy slash what it pays solar customers for excess power generation, undermining the growth of residential solar power in the state. The new rules, which include a $10-a-month tax on rooftop solar owners, make rooftop systems less attractive by raising costs and increasing the time it takes homeowners to pay off the investment. Utilities across the country, notably in California, claim the generous rates and benefits offered solar customers aren't sustainable and that those with rooftop solar systems aren't paying their fair share to maintain the transmission grid and support the maintenance of existing plants and the construction of new energy sources. Colorado, Idaho and Wisconsin are considering changes to their compensation programs. In Arizona, the powerful Arizona Corporation Commission (ACC) earlier this year reversed a bipartisan agreement to establish a 100% clean energy standard by 2050 for large regulated utilities that could have sparked a solar energy boom. Instead, the Republican-dominated utility commission left in place Arizona’s 2006 requirement that utilities get 15% of their power from renewables by 2025. The ACC now wants to change what it says are currently “unsustainable” rates paid to rooftop solar homeowners for the excess power they generate. There was a time not so long ago when Arizona legislators and regulators favored making the state’s electricity market more competitive and affordable. Sadly, that no longer seems to be the case. Last year, lawmakers removed the words “a competitive market shall exist" from the books despite an earlier request to the ACC to create a framework for the retail market that gave consumers more choices. That same utility regulator has now voted to revisit the compensation rate paid to homeowners and businesses with rooftop solar systems. The commission adopted the current "value of solar" rate in 2017 when it ditched the more generous net metering rate. Now, the ACC’s conservative majority wants to slash once again the return-on-investment rooftop solar owners can earn for selling excess electricity generation to their utility. It's almost as if Arizona conservatives no longer believe in free-market capitalism. What happened to small government conservatism, lower taxes, and the economic freedom of individuals? At the very least, Republicans should be on board with the populist idea of giving people the power to choose their electricity-generating source and service provider and not be dictated to by government regulators. But maybe not. Arizona's rejection of energy freedom and competition is part of a growing trend of political hostility to free enterprise across the country. Multiple states are fighting calls from consumers to have a more significant say in their energy choices. States are also increasingly taking aim at net metering and other compensation programs that pay homeowners a fair price for the extra power they generate and contribute to the grid. All of this is happening while electricity prices are going through the roof and consumers are increasingly being squeezed by inflation. Arizona's major investor-owned utilities have been promising to address rising electricity prices and clean energy goals for years but have failed to deliver. And why would they with a weak cop on the beat? An investor-owned utility without proper oversight is simply an unregulated monopoly that can charge customers whatever it likes. Requiring those utilities to compete for customers with the private sector would force them to prioritize cost savings and respond to consumer preferences. Arizona is blessed with renewable energy potential but still generates most of its power from natural gas, nuclear, and coal. Solar comprised just 10 percent of Arizona's electricity generation last year, and wind contributed only 1 percent. High prices and dirty energy are signs that incumbent utilities are not listening to their customers, who have no choice thanks to the state's outdated monopoly rules. Healthy competition is fundamental to any well-functioning market, whether the broader economy or the state's electricity market. Competition is a basic economic principle that says when firms must compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation. Conservatives rail all the time about the government picking winners and losers. If competition is beneficial in every other sector of the economy – even the Space Race is now open to competition from private companies – why do conservatives think a monopoly system is in the best interest of Arizona consumers? And finally, watch your inboxes for an invite to an upcoming webinar at the beginning of December on competitive electricity market reforms. |