Better technology threatens archaic utility monopolies

When Cynthia Cantero decided to cut her energy bill by installing a solar array on her home in Ewa Beach, she had no idea she was becoming a reluctant foot soldier in the battle over the future of the electricity system. The rooftop solar array could dramatically reduce her monthly electricity bill, and combined with thousands of her solar-intentioned neighbors, that’s what has the Hawaiian Electric Co. seeing red.

The issue isn’t utility versus homeowner, or solar producers versus those without, as utilities frequently suggest. Instead, it’s about a fundamental change in the nature of the electricity system. The electricity business has largely operated as a government-sanctioned monopoly for nearly 100 years. For decades, it meant more reliable energy at lower cost, though it ignored the environmental impact.

Cantero and many other Hawaii residents just want a lower electric bill, but inadvertently, they have unearthed the archaic nature of this 100-year-old model for electricity supply. Their bid to lower their bill with rooftop-generated solar electricity shows that the centralized, top-down energy system of the 20th century no longer makes sense. In fact, it poses a very important question:

In an age when power can be generated on rooftops, managed in real-time by smart thermostats and controlled remotely by smartphones, do we need a traditional, top-down electric utility?

Probably not.

But there’s a raging debate about what rises in its place, in Hawaii and other frontline states in the fight for energy democracy. Some are going off the grid. Oahu resident David Greene has solar on the roof, a battery in his garage, and just told the utility to come take the electric meter. Parker Ranch on Hawaii island is looking at building its own independent "microgrid," anticipating that it can beat the utility’s rates.

Utilities offer another option: Mash the square peg of solar and smart grids into the round hole of the 20th-century monopoly model. HECO has suggested halving the compensation for customers that produce solar energy from their rooftops. In more than 20 states, monopoly utilities are using their power and profits to push utility commissions and legislatures into protecting their publicly provided fiefdoms. It’s the ultimate delaying tactic, propping up a dying system in the pursuit of short-term profits.

The more likely long-term solution is transforming the energy system to capture the enormous local opportunity. If renewable energy resources are available everywhere, can be built at large or small scale, then they should be tapped in every community for its economic benefit. Some call this new paradigm "energy democracy." Energy democracy means distributing power generation over rooftops and windy fields and distributing the power of grid management to the masses. Consulting firm Accenture has highlighted the opportunity: Utility customers stand to recoup $48 billion from their electric utilities over the next decade.

Energy democracy wouldn’t eliminate utilities, but it would shift them to a facilitating role commensurate with the reduced need for centralized planning. Already, smartphones and smart appliances allow Americans to schedule their dishwasher to run at midnight, their electric car to charge at 2 a.m., and their air conditioner to start up when they’re 2 miles from home. If we can use eBay to set prices for used goods, why not electricBay for megawatts of power? Smart devices could make the process simple, and the distributed control of the grid would unleash decades of pent-up innovations in energy management and energy supply that utilities have been reluctant to embrace.

Utilities can’t get us to energy democracy. It will take leadership from electric customers, via their legislatures or public utility commissions. And it’s already happening. In New York, a regulatory process called Reforming the Energy Vision just suggested that electric companies be barred from owning rooftop solar and other small-scale power generation, to keep them from competing with their customers. And here in Hawaii, regulators have said that quashing customer solar is not an option.

Solar customers like Cantero may have been conscripted into the fight for energy democracy, but she and others already sense the economic opportunity of victory, and that the status quo is not an option.