The much-heralded death spiral of U.S. utilities is “last year’s hype,” according to California Public Utilities Commission President Michael Peevey.
It was propagated, he said, by members of the Edison Electric Institute, a utility lobbying group, out of a concern that rooftop solar supported by net energy metering would disrupt utilities’ longstanding business model.
That’s not going to happen, Peevey told an audience at VerdeXchange 2014, the seventh annual Los Angeles gathering of California’s greentech community. If utilities are smart, they will adapt to the new technologies, he said.
When utilities moved into the generation business some 30 years ago when he was at Southern California Edison, there was similar talk of “the end of the utility industry,” Peevey said. “I’ve seen these permutations happen again and again in the utility world.”
There were successes and failures, and the utilities survived. The companies with capability and persistence and which “put their customers first” will succeed. Those that get involved in “scrimmages over things like net metering that represent no more than 3 percent or 4 percent of the market won’t.”Google’s recent purchase
of Nest Labs for $3.2 billion shows the viability of residential electricity services as a business, Peevey said. “It comes down to management.”
Several U.S. utilities use the “service” model and see themselves as providing their customers with what they want. By going “with the flow,” such companies will do fine. If the companies now fighting net metering were providing solar, Peevey said, they might be bigger and getting a better return on their investment and would not be concerned with net metering.
“Utilities should simply listen to what their customers want and try to meet that, and they will continue to be successful.”
The resolution to the net metering controversy will be “some reasonable fixed charge,” Peevey said. There is typically a fixed charge for any service, and California lawmakers, in AB 327, provided the justification for a charge of between $5 and $10. The Sacramento Municipal Utility District, one of the most pro-distributed-solar utilities in the U.S., has levied such a fixed charge, he added.
Peevey promised the CPUC would hold “a lengthy proceeding" on the subject and hear all points of view. “But we have to face the reality that there are some grid services everybody has to contribute to paying for.”
Peevey noted that the recent CPUC mandate to provide grid storage offers utilities another opportunity to find a way to “meet customers wants at the same time they [are striving to] find a successful business model.”SolarCity
alone employs 4,600 people, and thousands of others are employed by companies using both PV and CSP technologies that barely existed a few years ago, Peevey said. “Betting on technology means choosing this state’s future prosperity.”