The Green Energy War: Will Edison’s Solar Play Trigger Be Properly Regulated by the California PUC?

By John Geesman
Green Energy War

Ask any Green Energy Warrior what it will take to win the war, and the answer is likely to be “technological transformation.” The feed-in tariffs in Europe and the renewable portfolio standards in the US focus on independent generators to prompt this change, implicitly believing the existing utility industry is too set in its ways to adapt quickly enough.

For utility-scale technologies, this judgment hinges on credible assumptions about willingness to incur technological risk and the inherent inertia of government-supported monopolies. For smaller technologies like distributed generation, the presumption is even stronger because the existing utility business model seems so widely divergent.

Which makes Southern California Edison’s proposal to install and own 1-2 MW photovoltaic systems on leased warehouse rooftops so potentially revolutionary. Little power plants. Connected directly to the distribution grid. No transmission required. Utility rate base. Within the insular precincts of transformative utility regulators, this feels like the grail.

The California Public Utilities Commission has poked and prodded its regulated utilities for several years to make just this type of investment in renewable generation, as opposed to simply purchasing the output from independent generators. The rationale is that an affirmative business motivation by the regulatee to implement the regulator’s policy preferences is more enduring — and more scalable — than begrudging compliance with fiat.

But the move has prompted apprehension among some of the pioneers in the solar industry, who fear unfair competition and discriminatory treatment from a ratepayer-subsidized behemoth. They argue that there is nothing about solar energy that suggests it is a natural monopoly and point to the well-documented history of cost overruns and technological stultification associated with rate based investments.

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