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- W765900320 abstract "Synopsis: A recent Energy Law Journal article by Elisabeth Graffy and Steven Kihm claims that the electric utility industry faces mortal threat in the near future from distributed generation and other emerging technologies that will allow customers to bypass the electric grid. The authors contend that utilities will be unable to recover in regulated rates investments stranded by this emerging competition and would be wise not to rely on such cost recovery. According to the authors, utilities face stark choice between seeking cost recovery and developing new services that add value in diverse electricity marketplace in which they will play less central role. Although partial alternatives to utility service are beginning to emerge, the authors' predictions are overstated and their advice to the utility industry is unrealistic. No realistic substitute for reliable electric service from the utility grid currently exists, and distributed technologies would have to make remarkable gains to become substitute in the time frame suggested by the authors. Distributed alternatives to grid-supplied energy are growing, but in response to huge government subsidies, the most significant of which is the regulatory practice of net metering. Net metering inappropriately prices distributed energy at the bundled retail rate. The utility industry is making substantial infrastructure investments, including investments that are necessary to allow distributed generation to succeed and to integrate renewables into the grid. The authors' suggestion that regulators will simply deny the recovery of these and other investments, with no legal recourse for investors, misunderstands the law and the role of the utility industry in our society. Even if distributed alternatives continue to grow, much of the public will rely on utility service for many decades, and the utility industry will continue to need access to capital and operating funds to provide this service. This capital will not be forthcoming if the authors' analysis is correct. Ultimately, the growth of alternatives to utility-supplied electric service may, over time, present challenge to regulators and the utility industry, but the challenge will be much more complex than the authors recognize and will involve issues of fairness between those who rely on the grid entirely, those who use it for some unbundled services, and those who eventually are able to fully disconnect.I. Summary of Death SpiralThe May 2014 edition of the Energy Law Journal includes an article entitled Does Disruptive Competition Mean Death Spiral for Electric Utilities?1 Death Spiral envisions utopian (for customers) and dystopian (for utilities) near future in which electricity from the utility grid is widely displaced by distributed energy sources that supply electricity at prices below utility service from the electric grid. According to the authors, distributed generation growth represents a trend that is expected to enable households and businesses to substantially reduce power purchases from their local electric utilities in large portions of the country within decade,2 It is unclear whether the authors are predicting that customers will soon disconnect from the grid in large numbers or merely reduce their energy purchases and rely on the grid for reliable service.The authors conclude that the distributed option will be so attractive to consumers and policymakers that efforts by the utility industry to limit its growth will be vigorously opposed. The utility industry will confront what they describe as of new technology, consumer sentiment, and public policy acting collectively against the utility industry model.We propose that disruptive competition signifies synergistic wave of innovations occurring in several sectors at once-technology research and development, policy development, social and cultural preferences, scientific investigation, and business . …" @default.
- W765900320 created "2016-06-24" @default.
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- W765900320 date "2014-07-01" @default.
- W765900320 modified "2023-09-26" @default.
- W765900320 title "Getting Distributed Generation Right: A Response to Does Disruptive Competition Mean a Death Spiral for Electric Utilities?" @default.
- W765900320 hasPublicationYear "2014" @default.
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