Thad Profile picture
24 Nov, 17 tweets, 4 min read
I don't know how many years I have heard the same tired arguments by utilities against net metering. Maybe 10+? If it is such an existential threat to all that is holy and humane, then I am disturbed by the lack of innovation on this front. A little pre-holiday thread/vent.
/2: In most states, the lost revenues associated with NEM are less than 1/10th of 1% of total utility revenue requirements. How are you going to keep saying that lost revenue shifts costs when rates usually don't change unless you come in for a rate increase?
/3: Utilities tend to stay away from regulators when they are earning in excess of their approved rate of return and only come in when they are cutting into that rate of return. They never wait long enough to see a negative rate of return.
/4: Let's say a utility comes in for a rate increase. Do they point to uncollectables from arrearages and ask to include that in revenue requirement (i.e., socialize it)? Yes! Do they point to lost revenue from NEM and ask to include that in revenue requirement? NO!
/5: The utilities aren't claiming NEM lost revenue as an expense, but as one of a hundred of factors that impact revenues and ability to meet the approved rate of return. Sometimes you see NEM and EE listed as a business risk scattered among other vague assertions to boost ROE.
/6: But regulators categorically never give utilities the ROE they ask for. It is always less. ROE is a dance of what is minimally acceptable to keep cost of capital low. 90% art, 10% science. And ROE is heavily contested because it has a huge impact on revenues and rates.
/7: So the NEM argument isn't about a utility expense that is being socialized, no, it is about oversimplified math. "We have fewer billing determinants (kWh) to spread revenues across, so rates will necessarily go up for everyone, especially poor people [pandering tone here]."
/8: But when utilities make that statement, they don't know what their revenue requirement will be after the next rate case, because regulators may actually lower the ROE and make net reductions to revenue requirement.
/9: "but, but, but... sure rates may not go up, but they won't go down as much as they would have without NEM." Again, useless argument in isolation. A utility experiencing population growth will add more load than they are losing due to NEM. A utility with new industry? same.
/10: And this ignores the embedded impact of NEM in reducing customer contributions to peak at the system and local level. Most utilities don't have visibility into that effect and it is hidden in the data. Without NEM, some costs would go up, full stop.
/11: In a world where electrification is our only chance out of the climate crisis, utilities stand to benefit immensely from load growth. It is virtually impossible for rooftop solar to completely offset the load growth that is coming after decades of load flatlining. So...
/12: Fewer billing determinants my ass...
/13: In sum, the OLD cost shift argument is just that, old and tired. It works to some effect in public discourse because ratemaking/sausagemaking is complicated and counterintuitive. Simple narratives are easy to digest and gain traction.
/14: Until rates change and a utility specifically points to a fully reconciled expense (i.e., netted out any system benefits) and socializes to all customers, there is only a theoretical cost shift. No one is paying anything extra because utilities are earning less.
/15: Instead of fighting the battle of 2014, utilities should see the opportunity to innovate and get "solar plus" options to steer the discourse to a more productive/positive place. Policy innovation is possible. Solar + storage, solar + DR; Solar+EV-V2G; it's all coming.
/16: DERs will define the future of the utility industry. Any utility still trying to put the nail in the coffin on NEM and rooftop solar is missing a giant opportunity to steer the narrative in a manner that might actually benefit their shareholders in the long run.
/17: I don't think I will be responding to any counterarguments, but will eat turkey for the next week straight. We will make this a better world one by one. Solar customers are not the villains, they are actually the heroes in our story.

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More from @ThadCulley

16 Oct
Alright, a little H.951 thread, by unpopular demand.
Carbon goal? Carbon mandate? Well, 951 requires the Commission to "take all reasonable steps to achieve a 70% reduction...from electric generating facilities owned or operated by electric public utilities [by 2030]."
So we are reducing Duke fleet emissions by 70% by 2030, not the electric sector in NC. What prevents Duke from selling its fossil fleet and entering long-term PPAs with the new owners? Is Duke still operating these plants for purposes of the law? I don't believe this will happen.
Read 18 tweets
18 Feb 20
THREAD: So, #energytwitter we did a thing. It is long testimony, but gives a pretty comprehensive look at how climate risks impact utility operations and should inform prudent planning going forward. Just a few words here on "why now?", not the merits of the case itself.
2/ Utilities like @ConEdison are now incorporating the state of the art in climate science to plan their system. Prudent planning requires this in 2020. Awareness of climate risk is here and the genie is not going back in the bottle.
3/ Corporate and investor awareness of climate risk is spiking. @blackrock and @statestreet CEO’s have strong words in the past few weeks/months re: corporations’ fiduciary duty to assess and disclose exposure to climate risk to investors.
Read 9 tweets

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