The breakup of the monopoly utilities was supposed to have begun in the 1980's with the passage of PURPA. This landmark legislation separated the generation of electricity from the transmission and distribution. The purpose of this was to enable competition in the electricity generation sector. It has been a generally accepted principle that allowing electricity suppliers to compete for customers would result in cheaper, greener electricity.
However, in California, this went horribly wrong in 2000 and 2001. The "energy crisis" caused by Enron and others resulted in a return of the monopoly investor owned utilities, PG&E, SDG&E and Southern California Edison to full vertically integrated monopoly status. These companies are responsible, within their service territories, for both electricity procurement and transmission and distribution. They are subject to the regulatory authority of the CPUC and the legislature. For the customers in their service territories, they are they only game in town.
As the pressure ramps up to reduce the carbon impact of electricity, there is a disincentive for the utilities to develop small scale renewables. The reason is simple: they make money on transmission. Locating small scale generation near to the load that does not require new transmission will not enable them to increase revenues year after year. Agressive rollout of demand response, reducing transmission needs.
Further, the utilities want to stay in the drivers seat on the rollout of new renewable capacity, owning it or controlling it if possible. The 33 percent renewable portfolio standard that is proposed for California, along with the emission cap that comes into force in 2020, creates enormous pressure to build new renewable generation. To the extent that utilities can derive revenue from these new sources, they can build their revenue base beyond simply transmission and distribution.
The bottom line is that, in the state of California and elsewhere, large scale rapid development of new renewable capacity is slowed and made much more expensive by the monopoly utilities. Their focus on large scale, expensive new resources, requiring major new transmission facilities will result in higher rates for California customers as well as a much higher carbon impact.
The most cost effective way to transform the electricity supply to a minimum cost, minimum carbon portfolio is to reduce demand, and locate publicly owned and financed resources close to the load.
The breakup of the monopoly utilities was supposed to have begun in the 1980's with the passage of PURPA. This landmark legislation separated the generation of electricity from the transmission and distribution. The purpose of this was to enable competition in the electricity generation sector. It has been a generally accepted principle that allowing electricity suppliers to compete for customers would result in cheaper, greener electricity.
However, in California, this went horribly wrong in 2000 and 2001. The "energy crisis" caused by Enron and others resulted in a return of the monopoly investor owned utilities, PG&E, SDG&E and Southern California Edison to full vertically integrated monopoly status. These companies are responsible, within their service territories, for both electricity procurement and transmission and distribution. They are subject to the regulatory authority of the CPUC and the legislature. For the customers in their service territories, they are they only game in town.
As the pressure ramps up to reduce the carbon impact of electricity, there is a disincentive for the utilities to develop small scale renewables. The reason is simple: they make money on transmission. Locating small scale generation near to the load that does not require new transmission will not enable them to increase revenues year after year. Agressive rollout of demand response, reducing transmission needs.
Further, the utilities want to stay in the drivers seat on the rollout of new renewable capacity, owning it or controlling it if possible. The 33 percent renewable portfolio standard that is proposed for California, along with the emission cap that comes into force in 2020, creates enormous pressure to build new renewable generation. To the extent that utilities can derive revenue from these new sources, they can build their revenue base beyond simply transmission and distribution.
The bottom line is that, in the state of California and elsewhere, large scale rapid development of new renewable capacity is slowed and made much more expensive by the monopoly utilities. Their focus on large scale, expensive new resources, requiring major new transmission facilities will result in higher rates for California customers as well as a much higher carbon impact.
The most cost effective way to transform the electricity supply to a minimum cost, minimum carbon portfolio is to reduce demand, and locate publicly owned and financed resources close to the load.
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