Solar panels could destroy U.S. utilities, according to U.S. utilities

[Mr. Big Dog 10,747]

I'm not convinced its good for consumers looking at the EU utilities. Its probably good for developers in that they can fight to get apparatus in quicker.

Of course then there is is the whole tariff system...which we won't get into.

Why is it not good for consumers? Do you really believe that monopolies deliver consumer goods better?

[Mr. Big Dog 10,747]

I should rephrase. True competition sure. I'm not sure the average consumer is getting the best deal though in the EU. From a developer's point of view though, yes the system works.

I don't think there's much debate about the downward pressure on consumer prices that the liberalization of the market has delivered.

[GandK 168]

There is so much misinformation and a bunch of bullsh$@ here that I don't even know where to start.

It's worse than that, though. Solar power peaks at midday, which means it is strongest close to the point of highest electricity use — "peak load." Problem is, providing power to meet peak load is where utilities make a huge chunk of their money. Peak power is the most expensive power. So when solar panels provide peak power, they aren't just reducing demand, they're reducing demand for the utilities' most valuable product.

1. The electrical demand "peak load" is not at midday. The daily peak load is around 6-7pm when people come home from work at switches their appliances or whatsoever. There is another smaller peak at 9-10am when people get to their workplaces. Day time load is covered by base load generators. Utilities actually LOVE solar panel because it helps to smoothen out day load and therefore reduce reserve generation capacity = save money. See no.2

This complexity makes it difficult to generalize about utilities … or to discuss them without putting people to sleep. But the main thing to know is that the utility business model relies on selling power. That's how they make their money. Here's how it works: A utility makes a case to a public utility commission (PUC), saying "we will need to satisfy this level of demand from consumers, which means we'll need to generate (or purchase) this much power, which means we'll need to charge these rates." If the PUC finds the case persuasive, it approves the rates and guarantees the utility a reasonable return on its investments in power and grid upkeep.<br style="color: rgb(28, 40, 55); font-size: 13px; line-height: 19px; background-color: rgb(250, 251, 253);"><br style="color: rgb(28, 40, 55); font-size: 13px; line-height: 19px; background-color: rgb(250, 251, 253);">Thrilling, I know. The thing to remember is that it is in a utility's financial interest to generate (or buy) and deliver as much power as possible. The higher the demand, the higher the investments, the higher the utility shareholder profits. In short, all things being equal, utilities want to sell more power.

2. Utterly misinformation and false statement. Public utilities in regulated market do not want to sell more power. Get it? As a matter of fact, Public utilities are not making any profit from the energy they sell to customers, they are only allowed to make profit from the return of investment they make on the infrastructure.

It's hard to believe right, I know. But let me explain it to you.

Utilities in regulated market are what they call "natural monopolies", they don't have competition. The electricity rates is authorized and approved by the public utilities commission (PUC). They also authorize the rate of return for the investment for utilities.

Every xxx year, utilities make "rates case" (basically how much they plan to invest in the infrastructure that year and etc)

Let's say the rates case for the year 2014 is $2 billions

Then, the PUC authorizes the rate of return of 10% for this year (Usually 10-15%)

So the authorized profit for this year is $20B x 0.10 = $200 millions (Let's call this A)

Next, the utilities estimate how much energy they need to purchase for the year, let's say $300 millions (B)

There other adjustment and costs etc, let's say this is $100 millions (C)

Then you add A + B + C = $200m + $300m + $100m = $600m

Then the $600 millions is the expected/require revenue. (Basically, if their revenue meets the goal of $600m, they will make $200m profit or 10% of their investment as authorized by the PUC)

Now, that they have the required revenue and they can easily estimate the throughput of electricity for the year which is easily estimated and predicted ( say XXX GWh )

Then you take $600m / XXX GWh, and you will get the electricity rates! ( Basically how much they have to sell their electricity for) and this will be reviewed and authorized by the PUC.

So, the business model of public utilities in regulated market are not like private company like Apple, Microsoft etc. They don't care how much energy they sell, they have to match the energy demand no matter what, they makes profit no matter what , their profit is regulated by the PUC.

They make money from the return of investment in the infrastructure and from managing their assets. Public utilities buys, stores and distributes energy to its customers, not sell. (As natural monopoly, they have an obligation to provide their product to whoever needs it and how much it is needed). In terms of profit, public utilities don't care how much energy they sell, their profit is not affected by demand. The regulation is there to encourage energy conservation, so they don't have to sell more iphones to make more money like Apple etc.

So here comes my point. Utilities actually love solar panel because they help to smoothen out the load and reduce the base load, so they can keep the rates low = more customers and happy customers.

Again, the example of calculation above is extremely simplified but that is the general idea how their business model works for utilities in regulated market.

(source: I am a power systems engineer and I work for a major US. utility)

Edited April 11, 2013 by GandK

[Darnell 8,478]

GandK - thanks for the clarity ! I was hoping you or your clone would pop in and explain it all. Thanks so much !

[GandK 168]

No problem. Keep in mind that the explaination above is only valid for publicly regulated utilities.

In deregulated electricity market like in Europe, that's where they try to pump up your electricity bill

[del-2-5-2014 1,339]

we have competition in Texas, for electricity utilities, all servicing the same address, for example.

Oh well.

back to the OP - stupid utility companies - they decide NOT to change their business models at all - they could have gotten into a huge business of leasing out roof-top USA-made solar panels 6 years ago, and didn't do it. Now there's not a USA Solar-panel manufacturer.

#### em, really.

Texas is a big place my friend.

Out in Celina where I had the misfortune to live previously (a sh!t pisser of a place if you ask me), we only had one choice, Grayson Power Company.

But then when I was in Grapevine I did indeed have a choice. Confusing ones but choices none the less.

[Darnell 8,478]

perhaps it was time and timing, Gowon? there's some website about it, can check now, see which power companies will handle an address or city.

I remember Celina for some reason, ages past, for something. a farm we were gonna rehabilitate? some ranch we were gonna turn into a pig farm and catfish ranch? oh well - that was 8 years ago and I still don't remember it, we didn't make an offer.

[The Nature Boy 4,224]

No, it's not a choice. I need electricity and have no choice where to get it from. For me, it's TECO. That's the only provider for this product. Over in socialist Europe, they have actual competition in that market. Each household has the choice among a number of providers for their electricity much in the same way in which you have a choice of providers when you're in the market for a phone, internet access, a car, milk or shoes. But we don't like competition here. We like corporations being able to rip off their forced customers all sanctioned by bought and paid for PUCs. Lenin would be proud of this model.

You do not need electricity you want electricity

[one...two...tree 2,762]

There is so much misinformation and a bunch of bullsh$@ here that I don't even know where to start.

1. The electrical demand "peak load" is not at midday. The daily peak load is around 6-7pm when people come home from work at switches their appliances or whatsoever. There is another smaller peak at 9-10am when people get to their workplaces. Day time load is covered by base load generators. Utilities actually LOVE solar panel because it helps to smoothen out day load and therefore reduce reserve generation capacity = save money. See no.2

2. Utterly misinformation and false statement. Public utilities in regulated market do not want to sell more power. Get it? As a matter of fact, Public utilities are not making any profit from the energy they sell to customers, they are only allowed to make profit from the return of investment they make on the infrastructure.

It's hard to believe right, I know. But let me explain it to you.

Utilities in regulated market are what they call "natural monopolies", they don't have competition. The electricity rates is authorized and approved by the public utilities commission (PUC). They also authorize the rate of return for the investment for utilities.

Every xxx year, utilities make "rates case" (basically how much they plan to invest in the infrastructure that year and etc)

Let's say the rates case for the year 2014 is $2 billions

Then, the PUC authorizes the rate of return of 10% for this year (Usually 10-15%)

So the authorized profit for this year is $20B x 0.10 = $200 millions (Let's call this A)

Next, the utilities estimate how much energy they need to purchase for the year, let's say $300 millions (B)

There other adjustment and costs etc, let's say this is $100 millions (C)

Then you add A + B + C = $200m + $300m + $100m = $600m

Then the $600 millions is the expected/require revenue. (Basically, if their revenue meets the goal of $600m, they will make $200m profit or 10% of their investment as authorized by the PUC)

Now, that they have the required revenue and they can easily estimate the throughput of electricity for the year which is easily estimated and predicted ( say XXX GWh )

Then you take $600m / XXX GWh, and you will get the electricity rates! ( Basically how much they have to sell their electricity for) and this will be reviewed and authorized by the PUC.

So, the business model of public utilities in regulated market are not like private company like Apple, Microsoft etc. They don't care how much energy they sell, they have to match the energy demand no matter what, they makes profit no matter what , their profit is regulated by the PUC.

They make money from the return of investment in the infrastructure and from managing their assets. Public utilities buys, stores and distributes energy to its customers, not sell. (As natural monopoly, they have an obligation to provide their product to whoever needs it and how much it is needed). In terms of profit, public utilities don't care how much energy they sell, their profit is not affected by demand. The regulation is there to encourage energy conservation, so they don't have to sell more iphones to make more money like Apple etc.

So here comes my point. Utilities actually love solar panel because they help to smoothen out the load and reduce the base load, so they can keep the rates low = more customers and happy customers.

Again, the example of calculation above is extremely simplified but that is the general idea how their business model works for utilities in regulated market.

(source: I am a power systems engineer and I work for a major US. utility)

Peak hours vary from one area to another, but according to the utility companies, typically are between the hours of 3pm -7pm. In the sunny, southwest in midsummer when people are using their ac's the most, there's plenty of sunlight. If you go back and read what the author actually said, his assertion was correct.

Secondly, the article is based on an industry report where it is the utility companies worried about their future. Trying to dismiss this article as being riddled with inaccuracies by a self proclaimed industry insider only makes it that more interesting. Solar proponents have been talking for years about 'getting off the grid,' which for awhile had only appealed to a small segment of the population is now becoming mainstream as Americans look at ways to being more independent for their energy needs.

[Mr. Big Dog 10,747]

You do not need electricity you want electricity

That's bull and you know it.

[Ban Hammer 12,880]

~ $0.09.

i'll trade you - we're .13 cents here.

[PalestineMyHeart 1,897]

Texas is a big place my friend.

Out in Celina where I had the misfortune to live previously (a sh!t pisser of a place if you ask me), we only had one choice, Grayson Power Company.

But then when I was in Grapevine I did indeed have a choice. Confusing ones but choices none the less.

No choice here in San Antonio, either - it's CPS Energy only.

Apparently, energy prices are comparatively low here. My last bill (including the fuel adjustments and regulatory adjustments) came out to 0.09045 per kwh. Gas was 0.72207 per 8 ccf.

[erynaught 43]

Why is it not good for consumers? Do you really believe that monopolies deliver consumer goods better?

Sometimes yes. Sometimes no.

Take deregulation of the airline industry - sure, airfares have gotten cheaper, but so haven't the standards of customer service. Air travel has not gotten better at all, only cheaper.

[erynaught 43]

That's bull and you know it.

No, electricity is not necessary. This is why electric service is allowed to be disconnected for nonpayment (allowing for certain circumstances such as medical need, etc. where utilities are not allowed to shutoff power).

[Karee 4,189]

Good for Texas. It's precisely what they do overseas as well. Good to know that at least some of the states are learning. Florida sure doesn't. It's as corrupt as it is in some African nations around here.

Did you just say something nice about Texas? A little early in the morning to be hittin the sauce, don't you think?