Tuesday, November 24, 2015

El Sol Meets Mr. Monopoly

The power of monarchy includes within it the seeds of oligarchy.  Kings, emperors, tsars, khans, warlords of all stripes have been surrounded by courtiers.  Often these courtiers have been able to secure exclusive franchises for themselves-valuable monopoly rights they used to enrich themselves at the expense of the public. 

Thomas Jefferson asserted that the British Crown's use of its power to parcel out and divide up territories and assign rule over them by court favorites was a terrific abuse of power.  Jefferson wrote: "Accordingly that country, which had been acquired by the lives, the labours, and the fortunes, of individual adventurers, was by these princes, at several times, parted out and distributed among the favourites and followers of their fortunes, and, by an assumed right of the crown alone, were erected into distinct and independent governments; a measure which it is believed his majesty's prudence and understanding would prevent him from imitating at this day, as no exercise of such a power, of dividing and dismembering a country, has ever occurred in his majesty's realm of England, though now of very antient standing; nor could it be justified or acquiesced under there, or in any other part of his majesty's empire."  -Thomas Jefferson, A Summary View of the Rights of British America.

North Carolina’s founders well understood the dangers of granting monopoly power and concessions to "favourites." Having observed these abuses under the Lords Proprietors, the founders sought to abolish monopolies and emouluments.  North Carolina’s Constitution states that monopolies are contrary to the genius of a free state and are banned.  By law, monopolies are only lawful in North Carolina to the extent that they serve the public good.    

With great power comes great responsibility and the power to monopolize the power grid is gigantic.  Investor-owned utilities operating in North Carolina’s regulated monopoly structure must serve the public interest, or their monopoly itself is unlawful.  Public utilities may enjoy monopoly privileges only in return for providing critical services to the public.

But courtiers expect to be able to cash in.  As the saying goes, membership has its privileges.

church in Greensboro decided to cut its power bills and practice Christian stewardship by harnessing solar power produced by a local nonprofit. Duke Energy seriously overreacted by calling for a $120,000 fine against the nonprofit NC WARN as reward for its efforts to promote solar energy access. As we look to a resolution, North Carolina’s Utilities Commission should balance the public interest in favor of energy choice. Monopolies always guard their privileges and the Utilities Commission must advocate for the public’s interest and protect it from monopoly power.
North Carolina’s Utilities Commission must balance the public interest in favor of energy choice and against monopolistic investor returns when those two interests conflict.  

NC WARN is not seeking to exercise a monopoly privilege.  Faith Community Church is only trying to serve its mission of stewardship.  Duke Energy should leave them alone and get back to serving the public.  Duke Energy’s official and press responses include calling for fines and injunctions from the Utilities Commission, quite an imperious demand.  If its request is granted, the Utilities Commission's impartiality must be called 

Duke Spokesperson Randy Wheless pointed out in a recent letter  that 3,000 of Duke Energy’s customers have solar installations connected to its grid.  That grid is a form of monopoly, sanctioned under North Carolina law as a bargain: the utility is given a monopoly over its franchise area in exchange for the utility providing adequate and reliable services to North Carolinians at reasonable rates.  NC WARN has not sought to take over that grid from Duke Energy.  All NC WARN has done is hook up an existing Duke Energy customer to the Sun.  Duke Energy still sells power to Faith Community Church, just less of it.

All North Carolina’s ratepayers benefit from efforts to reduce collective demand for power.  The most expensive policy for us is one which supports construction of unneeded plants.  Under North Carolina’s monopoly system, both the costs of constructing these plants and a healthy return on investment to utilities’ shareholders are passed along to customers.  Under a settlement Duke Energy’s shareholders were given a return on equity of 10.2% under the 2013 rate increase.  That meant for every dollar invested by Duke, another dime was added on to the total and the bill for the entire cost was sent on to ratepayers.

North Carolina’s monopoly system encourages public utilities to stimulate energy demand in order to justify plant construction.  Costs of fuel get passed on directly to consumers so the utilities have little incentive to worry about fuel cost.  Solar’s fuel-free charms are thus lost on a public utility, but are not lost on a nonprofit like NC WARN or a church like Faith Community Church.

Duke Energy’s coal ash spill costs are also likely to get passed along to all the ratepayers. They have not been exactly trumpeting that fact and legislators last session carefully dodged the question.  While the fines and penalties they paid for polluting our state are paid by the shareholders, the true cost of coal power is a legacy cost which is going to get passed along to all of us.  Coal is never clean and never has been. 

Duke Energy supports solar when they have a monopoly on selling power from it.  That way, they get to pass the construction cost and other markups along to consumers.  NC WARN and Faith Community Church are not selling electricity to the public, they are just contracting between themselves.  In so doing, they are reducing the demand from the church.  This is not lawless anarchy, but good Christian stewardship of the Earth.  Members of Faith Community Church have the right to start decreasing the demand for coal-fired power.  NC WARN should be able to help them.  Customers have the right to choose how to cut their power bills.  The Utilities Commission must represent the public interest and help customers reduce their demand.  Reducing peak demand saves money for all of us. 

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