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Campbell jilts little guy for crony capitalists

Democrat Public Service Commissioner Foster Campbell would rather support crony capitalists than the little guy.

That much he proved last week when the Public Service Commission changed its rules regarding net metering. This refers to the legal requirement that utilities pay customers who generate their own power through solar energy for any excess above which the customer uses. After the end of this year, they will pay wholesale; previously, they paid retail.

Democrat Lambert Bossiere joined Campbell in opposing the change, while Republicans Mike Francis, Craig Greene, and Eric Skrmetta voted in the majority. Advocates noted that this roughly 6 cents per kilowatt-hour represented a subsidization paid by 99 percent of residential customers to the other one percent for no adequate reason. In particular, buyback participants put no money into overhead for building and maintaining transmission capacity, which otherwise justifies the difference between wholesale and retail.

Crying foul were representatives and employees of the solar panel industry, who alleged the change would cause job losses. The transfer of wealth from the overwhelming majority of ratepayers to a very few constitutes an incentive to install panels from these companies – although the vast majority of installations occurred when an overly-generous state tax credit made it possible for residential customers to get the panels essentially for free. Even so, a generous federal tax credit of 30 percent remains although scheduled to dwindle away, and the current PSC rule remains grandfathered in through 2034 for systems installed by Dec. 31.

But Campbell, who represents north Louisiana, downplayed concerns that ratepayers would miss the estimated $1 extra a year that they subsidize customers with panels. Perhaps he has forgotten his humble origins (his last legally required disclosure form from 2017 shows he has property worth at least $445,000 to $755,000 and annual income of at least $215,000 to $425,000, not including his wife’s assets or income). A dollar means something to low-income families who strain to pay their electric bills.

Beside that, there’s no intellectual justification for treating new customers with solar setups advantageously, much less existing ones. Campbell offered that Louisiana is a “dirty” state and should encourage a “clean” program. However, that comment displays ignorance that the production of “clean” energy is significantly environmentally harmful, although because Louisiana disproportionately doesn’t engage in high technology manufacturing it can export such costs more easily. Still, the marketplace best determines the mix of energy sources, and in Campbell’s own district in the past few months solar farms are sprouting in Caddo and Morehouse Parishes without overt government prodding.

This time, Francis and Skrmetta avoided the controversy of last year's Windcatcher fiasco. They with Bossiere and Campbell voted to allow energy suppliers to substitute likely more expensive wind power for existing sources (although they did implement a customer savings guarantee that would have applied for the first decade that could have extended if a crucial federal tax credit wasn’t renewed). Fortunately for ratepayers across Louisiana and three other states, the deal fell through when Texas regulators unanimously rejected it. Simply, there’s no good economic reason to privilege renewable energy through government policy.

That extends to allowing expansion of subsidized solar energy by taking from the many to give to the few, whether they be those lucky enough to afford placement of solar panels on their roofs or those selling that product. Campbell often styles himself as a champion of the working man, but all he and Bossiere did with this vote was to show themselves willing to kowtow to special interests at the expense of ordinary folk.


David W. Young said...

So typical. Mr. Sadow is parroting a utility talking point rather than understanding the issue. Utilities are making a selective claim of subsidy against roof-top solar. Regulation of a natural monopoly is a witches’ brew of subsidies which affect all customers in different ways.

First, let’s make it clear. Commissioners Boissiere and Campbell are for the little guy. Since the new Net Metering Rule only applies to new systems, the ruling only applies to new contracts. In a politically masterful stroke, dissension among current customers was discouraged through a 15 year grandfather. Guess the $1/year/customer subsidy wasn’t important after all.

Commissioners Campbell and Boissiere saw through the claims. They recognize the state benefits from jobs, investment and the release of a few dollars into the economy instead of sending it to corporate coffers. They believe in renewable benefits. They disbelieve utility claims of meaningful subsidies. The Rule vote was simply a protection racket without regard for the issue of scale or public interest.

Let’s put it in perspective. In 2017 SWEPCO granted 10 new Net Metering contracts. Had the new Rule been in place the transfer from customer to SWEPCO would have been less than $2,500/year. Say again, less than $2,500/year. To any rational person this is inconsequential to SWEPCO’s 200,000 customers or to their bottom line.

So what is this about? Bragging rights, not monetary losses. Louisiana now joins the bottom of the pack in recognizing roof top solar benefits and allowing customer choice. Utility executives have proven to shareholders that there is no fear of business risk or lost revenues from this market. They can continue to make the rules, and they can continue to reap the profits. Bet the Executives get a big fat bonus for this one.

Let’s talk subsidies.

Residential Average Tariff Rates: Some customers use more than average, some less. It all averages out. That is a subsidy.

Energy efficiency programs: The benevolent utility offers lighting upgrade programs and home energy efficiency upgrades. They get paid back for bloated administrative costs and, of all things, lost revenues. Only a few customers use these programs, but everyone pays.

Renewables: Utilities discourage customer investment in renewable energy while lobbying for billion dollar wind farms is more than ironic. Kill local investment, tax base and jobs but invest in the same in other states? Build hundreds of miles of transmission while denying the value of distributed resources? All of these resources use tax credits which cost us all.

Mr Sadow, and anyone else interested in utility monopoly regulation, should read Electricity Regulation in the US, A Guide, Second Edition. It helps you understand the why monopolies call their customers captive and the efforts of many regulatory agencies to slowly unwind this model. Disruptive technology doesn’t end with roof top solar. Soon Battery storage and demand-reducing inverter technologies will have to be recognized. Regulators can find ways to adapt, or they can continue to protect the utilities. There is no in between.

We’ve done this before. Steel, petroleum, Ma Bell, Taxi cartels, Amazon have all been changed or have changed the marketplace for the benefit of the consumer. Yes, change is difficult and must be managed. But using regulatory protection to keep technology and customer choice out of the hands of consumers is patently wrong.

Mr. Sadow and others defend the protection of the monopoly over the consumer. Just who is the crony capitalist?

David W. Young

Jeff Sadow said...

I welcome any technology that creates competition, but I don't want to be forced to subsidize it. That's what the old net metering rule did (and will, as you point out, continue to do so for existing setups for the next 15+ years).

That other forms of subsidies may exist doesn't validate the one that benefits you. Ensuring that I don't have to have my wealth transferred to someone else with political favor isn't the same as "protecting" existing providers.