Nothing New the Sun is Under

A sustainable, solar energy future was envisioned almost a half century ago. Today, long after the technological barriers have been overcome, and many years after the economics of solar energy became transcendent in the sunniest climes, artificial barriers remain in place.

All that is required in order to repress the value of solar energy and energy conservation in sunny lands is to defeat the value of such investments in the economic sectors that are most active in the daylight hours.

The electric utilities issue rate schedules for commercial ratepayers that differ dramatically from those for residential ratepayers. In Arizona, the commercial rate schedules are structured so that they defeat investments in solar energy and energy conservation.

The Rate Crimes energy blog exists primarily to explain this problem and its ramifications. However, this is hardly the first attempt in history to draw attention to this issue.

A few years after the first energy crisis, in 1977, The Sierra Club adopted a conservation policy that addressed electric utility rate structures.

“Customers should not be discouraged from owning or installing renewable resource systems by discriminating rates or charges.” – The Sierra Club, Adopted by the Board of Directors May 7-8, 1977

In the intervening decades, numerous battles have been fought to eliminate such “discriminating” rate schedules. Many of these battles were won. Yet to this day, the nation’s sunniest state remains entrenched in its repressive habits; while community and institutional memory of the earlier warnings has apparently failed.

The Energy Secretary and Congress are now championing entrepreneurship as the source of solutions for energy generation and efficiency. Let us free these entrepreneurs from under the thumb of economic oppression.

PIRG Version

The version of energy efficiency that is promoted by nearly all interested parties in Arizona neglects the central economic constraint imposed upon Arizona’s exploited energy market.

Even though the Rate Crimes blog was created only in May of this year, its central message – that Arizona electric utility rate schedules repress the value of solar energy and energy conservation in the nation’s sunniest state – has been declared in a variety of media and venues over the past half decade.
Yet, five years after the message was first broadcast, even the strongest advocates of solar energy and energy conservation remain inattentive to this fundamental economic issue. Repressive rate schedules have denied Arizona a sustainable future and have led to the state’s failure to become the prime catalyst of the world’s solar energy future. Advocates of all cloths remain focused on limiting energy price increases while ignoring both the inequities inherent in the existing rate schedules and the dangers of hiding the real immediate and future costs of toxic fuels.

Artificially limiting today’s utility cost increases only perpetuates the economic shell game and further delays the advent of the world’s solar future. Last week’s congratulatory letter from the Director of Arizona Public Interest Research Group (Arizona PIRG) is emblematic of this flawed calculus:

October 9, 2009

Congrats! Thanks to those of you who encouraged the Salt River Project (SRP) to increase their commitment to energy efficiency, their board voted to spend millions more on energy efficiency programs and renewable energy resources at no additional cost to ratepayers. [emphasis mine]

This is certainly a success and could not have been achieved without the support of SRP ratepayers and others. As we told the media, "By voicing opposition to the proposed SRP rate hike, ratepayers scored and ended up winning more stabilized prices, greater reliability and a reduction in infrastructure costs through improved energy efficiency."

While the recent SRP vote is a victory, there is still much more SRP, Arizona Public Service, Tucson Electric Power and other utilities in Arizona need to do to increase energy efficiency. I look forward to working together to make this happen.

Sincerely,

Diane E. Brown
Arizona PIRG Executive Director

If the balance of “millions more” is not to be pried from ratepayers but rather to be derived from the efficiency programs, one must wonder why the utility did not long ago implement such efficiency measures and enjoy the profits. Why was it necessary for ratepayers to “voice opposition to the proposed SRP rate hike” before these efficiency programs were initiated? Why does the utility need to “increase their commitment to energy efficiency”? Should they not already be fully committed to energy efficiency for both their own benefit as well as the public’s? Would not having long ago provided honest rates and rate schedules been more than enough of a commitment to this end?

While Arizona energy prices remain artificially curbed, and the utilities’ rate schedules continue to repress the value of solar energy and energy conservation measures, then to impose belated efficiency programs is only a reactionary symptom of the byzantine economics of poor central planning. This continuation of a debilitating exercise in market capture imposes yet another debt burden on our children.

Advocates for energy efficiency, solar energy, and sustainability would do well to pull their heads out of the caliche and shift their priorities towards resolving the fundamental issue of repressive rate schedules and to begin transferring our investments into truly sustainable solutions.

Energy Shavings

Over $2.7 billion in formula grants are available under the Energy Efficiency and Conservation Block Grant (EECBG) Program. The U.S. Department of Energy (DOE) awards these federal taxpayer funds to units of local and state government, Indian tribes, and territories to develop and implement projects to improve energy efficiency and reduce energy use and fossil fuel emissions in their communities.

To date, Arizona has been awarded over $28 million in future EECBG projects.

Arizona is trending strongly towards a black energy future because of a decades-long imposition of rate schedules that repress the investment value of solar energy and energy conservation measures in the commercial sector. The rate schedules shift an inordinate burden of energy costs into the captive small business sector; where then the costs are passed through to Arizona consumers. This effectively creates a hidden, regressive tax. Because of the inequity of Arizona’s Renewable Energy Standard and Tariffs (REST) rules, wealthy homeowners have the ability to more easily escape rising energy costs, while less fortunate renters are left to carry a doubly inordinate burden of rising energy costs piled upon a hidden energy tax.

If conscientious renters wish to support clean energy, they are further insulted by incurring a surcharge for such energy from the electric utilities. Furthermore, the densely packed renters are subsidizing the higher energy costs that result from the outspread infrastructure built to satisfy the developers, builders and owners of the houses dispersed across the distended sprawl of the Phoenix metropolitan area.

The DOE states, “Transparency and accountability are important priorities for the EECBG program and all Recovery Act projects.” The DOE can award tens of millions of taxpayer dollars to a misbuilt megapolis that is fundamentally and structurally inefficient and unsustainable. Yet, Rate Crimes, one of the few entities attempting to bring transparency and accountability to energy policy in our nation’s sunniest state, does not qualify for even the tiniest grant.

Sunny Arizona remains a final remnant of repressive electric rate schedules that induce extravagant consumption. The utilities profit from increased consumption. State and local governments gain from the concomitant increase in (regressive) tax revenue. The utilities magnify energy costs in the captive small commercial sector which must consequently increase their charges to consumers for goods and services. Again, the state and local governments gain from increased sales taxes. There are no real brakes on this machine. Ineffectual deceptions such as the Residential Utility Consumer Office (RUCO) serve only to disguise the dim reality. Arizona citizens serve to move money into the pockets of politicians and into the bank accounts of the shareholders of privately held utilities.

Now, federal taxpayer funds are being injected by the DOE into this cryptic and broken system. Until the Arizona rate schedules are repaired, yet another source of public funds will be shaved off.