If you find yourself here reading this blog, it is safe to assume you take the climate crisis seriously and understand the urgency needed to address our emissions across the economy. However, the situation may be even more dire than previously thought. The United Nations’ World Meteorological Organization (WMO) recently released a new report that stated that there is now a 40% chance that global temperatures will reach 1.5 degrees Celsius above pre-industrial levels in at least one of the next 5 years, and the odds are rising. What does this mean? We are rapidly approaching the limit that the IPCC has designated as the maximum global temperature increase before we set into motion a set of ecological, meteorological, and biological processes across the planet that will be irreversible. There has never been a more urgent time for us all to stand up and fight for what is right.
In response to climate change, jurisdictions, municipalities, cities, and even states are setting their own ambitious climate goals. The strategies employed to mitigate climate change will succeed depending on how they are tailored to the specific circumstances of each community. With that being said, electric providers are inherently part of that equation, no matter what the community. Building energy and transportation continue to be the largest contributors to our country’s greenhouse gas emissions. As it stands currently, the predominant strategy to address these sectors is to electrify as much as possible and to transition to clean sources of electricity. A recent report developed by the National Renewable Energy Laboratory (NREL) examined the viability of scaling electrification across the entire economy and how that would affect our country’s electricity infrastructure and system. As the economy shifts towards electrifying as much as possible, the source of a community’s electricity becomes increasingly important.
There are three types of electric utility providers in the United States: Investor-Owned Utilities (IOUs), Publicly Owned Utilities (POUs), and Cooperatives (Co-ops). IOUs are for-profit electricity providers that issue stock owned by shareholders. They hold nearly three-quarters of the market share, serving 110 million customers in the US in 2017. POUs are not-for-profit federal-, state-, and municipal-run utilities that served 24 million customers in 2017. Lastly, co-ops are not-for-profit member-owned utilities that serve the same customer base that owns the utility. They operate on a cost-for-service basis and served 20 million customers in 2017. For more information about the types of utilities in the United States, visit the Energy Information Administration.
Why is this important? Well, as we move further into the 21st century and are forced to address the climate change crisis that has been ignored for decades, transforming the way communities acquire their electricity and energy is paramount. Painting with broad strokes, Investor-Owned Utilities typically have one mission: to provide electricity to their service territory while maintaining their bottom line. POUs and cooperatives, because they operate as not-for-profit entities, often are much more focused on providing their communities with service that meets the specific goals and needs of the community. Without generalizing, there are also other differences to highlight. IOUs are structured such that any benefits from renewable energy generation are enjoyed by the millionaires that own and operate these utilities, while POUs and cooperatives share the benefits of renewable energy generation locally with the community. Additionally, locally-sited renewable energy sources build a community’s resilience to climate change disasters. IOUs may build a large capacity solar farm hundreds of miles from a community they are serving to provide “renewable energy,” however, often this is enacted through green credits, rather than actual transmission of renewable sources of electricity. You may think, “Well, what difference does it make? If that electricity is going somewhere, it’s reducing the amount of fossil-fuel electricity generation as a whole.” Yes, this is true, however, the key difference lies in who receives the benefits of that renewable energy. In the face of a natural disaster, transmission lines can go down. For example, take what happened in Texas this past year, where millions of people were left without any electricity for days at a time. Locally-sited renewable energy sources provide the most benefit in community resilience because the electricity doesn’t have to travel long distances across a grid to reach its end-user.
IOUs are also often found in opposition to a community’s climate goals because they are most interested in maintaining a profitable business model. In California, Investor-Owned Utilities recently proposed bill AB 1139, which would have gutted net-metering in California. Thankfully, it was defeated by a robust response from citizens like you and the rooftop solar industry.. Net-metering is the mechanism in which customers with a renewable energy generation source can get paid for the excess electricity that their system produces. In California, this is typically rooftop solar. Net-metering is also the mechanism that makes installing such a system work financially for many individuals -- they are able to pay for the system with energy-savings over time. Why would IOUs propose this bill? Put simply, for every one of their customers that installs a renewable energy system that qualifies for net-metering, they lose a small percentage of their revenue source.
So, where does this leave us? Depending on where you live, the type of utility that serves you, and the relevant local and state laws, the course of action needed varies. Most states now have laws around Renewable Portfolio Standards (RPS) that mandate the percentage of electricity generation that needs to come from renewable sources by a certain date. A state may outline an RPS of 50% by 2040, with intermittent stepping-stone goals, meaning that all electricity providers within that state must procure at least 50% of their electricity generation from renewable sources by 2040. These laws can help move a community, municipality, or even state towards its own climate goals, but often are not enough. Seven states currently have laws that allow Community Choice Aggregations (CCAs), which allow local governments to procure power on behalf of their community from an alternative supplier, while still utilizing the previous utility for transmission, distribution, and fee collection. CCAs give the power back to the communities on where they choose to procure their energy, what to charge for it, and what percentage of that energy is from clean, renewable sources. Frequently, this lends itself to community solar or other community renewable sources, where the benefits of the renewable energy are enjoyed by the residents of that area. These benefits can include lower utility rates, cleaner air, more community grid resilience, progress towards a community’s climate goals, etc. In California, CCAs have played a pivotal role in meeting the state’s climate goals, as well as pushing many communities towards their own local goals.
If you live in a state that does not currently allow the formation of CCAs, call or write your Member of Congress and push them to pass a bill that will allow for CCAs. If you live in a jurisdiction that receives their electricity from an IOU, contact your local government and ask them to renegotiate their franchise agreement with the utility provider. Franchise agreements can be strong negotiating tools for local governments to push IOUs to align more with the community’s climate goals. If you live in a community without their own climate goals, push your local government to start taking action, make a commitment towards your community’s future, and transition your energy supply to clean energy sources.
Remember, it is the people who have the power, we just have to use it.