Notes on this paper which discusses many state laws that rule that when local power generation, such as solar, feed energy back into the system that the meter run backwards.
Such net metering conflicts with the Public Utility Regulatory Act (PURPA) requirement on utilities to purchase “qualifying facility” output at no more than “avoided cost.”
That sounds like a good rule, modulo the difficulty of defining the terms.
In the case of electric utilities these costs include building and maintaining power lines, transformers, power control mechanisms, etc., not to mention the depreciation of under used central generating plants.
(I agree with much of the text that I don’t quote.)
“In Wisconsin, for instance, the average retail price is 400 percent more than wholesale.”
It would be good to describe how this comes about.
The article goes on to describe other distortions that would be avoided with time varying prices to the end user.
Such variable prices should apply to both the central and distributed power producers.
Legislated variation, such as current ‘time-of-use’ schemes are good but dynamically determined (auctioned) prices would be better.
To account for transmission costs the price must vary with location too.
‘Power factors’ are even another issue.
The paper has identified the unfairness of the current “net metering” rules but fails to propose better solutions to the problems they are meant to solve.
Thus the paper fails to describe a win-win solution that would suit the stated goals of both the incumbent power companies (both wires and generators) and the greens who want less CO2 in the air.
“Finally, a variety of regulatorily imposed public goods programs, such as low-income assistance, are included in retail rates.”
Agreed. I don’t oppose public goods programs but I oppose them wrapped up in power price rules.
They mess up economics beyond net metering issues.
“Current net metering policies should be reformed, and prices set fairly and reasonably.
As rooftop solar and other DG systems become more developed, net metering policies and rate structures should be updated so that everyone who uses the electric grid helps pay to maintain it and to keep it operating reliably at all times.
This will ensure that all customers have safe and reliable electricity and that electric rates are fair and affordable for all customers.”
Perhaps this plan should even be extended to issues of power outage where some subcomponent of the distribution system has failed.
Local emergency power, at a greatly increased price, should be available to those high value power applications as an alternative to the current “all lights out” plan now in place.
Much of the current power distribution plant can supply this in theory.
I can imagine being awoken on a stormy night by my computer reporting to me that the price of a KWH has risen to $7.42 and hopping out of bed to jump into my car which has both an internal combustion engine and a generator and feeding the local grid for a few hours.
A report by the American Society of Civil Engineers (ASCE)29
described the nation’s electrical grid as a patchwork system that ultimately will break down unless $673 billion is invested in it by 2020.
The paper quotes this as a warning that we will be sorry if we don’t do something now to avoid problems later.
This is a common warning from utilities, road and bridge builders.
I have never heard a clear explanation of why a dollar spent now is more effective than a dollar spent when the stuff breaks.
If budgeting is your thing then budget for repairs and even upgrades.
“Ideally, no source of electricity would be given preferential treatment.
There would be no subsidies, no government stimulus, and no rebates.”
Is this before or after CO2 externalities are considered?
This is a fine motto after a Pigouvian CO2 tax is in place.