A Guide To Clean Energy Policies And Players
Although the benefits of renewables are simple to understand, navigating the terminology of energy policy is a more difficult task. Here’s a quick guide to understanding the key players, practices, and policies that influence clean energy growth in the United States.
Although the benefits of renewable energy are simple to understand, navigating the terminology of energy policy is a more difficult task. Here’s a brief guide to understanding the key players, practices, and policies that influence clean energy growth in the United States:
For most people, energy means flipping light switches, turning on the AC, and paying utility bills at the end of the month.
These services are provided by electric utilities—typically monopolies that control electricity generation, transmission on power lines, and sales to consumers.
Utilities are subject to state regulation, which preserves utilities’ monopoly status and guarantees utilities a rate of return on their investments in exchange for enacting regulations to protect the public interest. This model prevails in most states, although some “deregulated” states have introduced competition in electricity markets.
In addition to supplying electricity, utilities exert significant political and financial clout—which is often used to undermine the growth of renewables that threaten their profits.
Public Utilities Commissions
Sometimes called “Public Service Commissions” or “Public Corporation Commissions,” state Public Utilities Commissions regulate electric utilities and other services such as natural gas and water.
PUCs play a major role in clean energy policy. PUCs develop rules and oversight to implement energy laws. PUCs also make their own rulings that address everything from new energy investments to acceptable electricity rates.
Earthjustice At Work
Earthjustice attorneys work both in state legislatures and in PUC cases (known as “dockets”) to push clean energy forward. In Ohio, Earthjustice is fighting utility proposals that could cost customers billions of dollars while guaranteeing profits for corporate shareholders. And, in California, Earthjustice is working in the PUC to defend plans to build the infrastructure for electric transportation across the state.
Today’s electric grid is primarily characterized by “centralized generation,” where massive power plants generate hundreds or even thousands of megawatts of electricity that is delivered via transmission lines to customers who live many miles away.
“Distributed generation” or “distributed energy resources” refer to smaller-scale electricity generation at or near the site of consumption, such as rooftop solar or small-scale wind turbines.
Distributed generation increases energy security, reduces vulnerability to blackouts, and avoids costly transmission line investments.
Because distributed generation is often owned by customers, it can also reduce electricity costs and democratize energy by expanding customer choice over their electricity supply. For this same reason, distributed generation threatens utilities’ control of the grid, making it a prime target of policy attacks.
Similar in concept to a community garden, community solar allows multiple customers to purchase electricity from the same solar installation.
These projects are usually sited in fields or on large rooftops, such as on warehouses or houses of worship. Community solar allows customers to access solar power even when they cannot install it on their own homes because they are renting their property or because their roof is not suitable for solar.
As of September 2017, 26 states host 101 community solar projects that produce over 108 megawatts of solar energy.
Earthjustice At Work
Maryland is one of the most recent states to enact a community solar program, thanks to bipartisan legislation Earthjustice helped pass.
Net metering allows customers to receive compensation for excess electricity they generate.
In the case of solar, customers can sell electricity they don’t consume to the utility during the day and purchase electricity from the utility when the sun stops shining.
Net metering customers are billed for the “net” amount of electricity they consume: electricity purchased, minus electricity generated. This policy has been essential in fueling the growth of rooftop solar, which is estimated to have grown as much as 900% since 2011.
In recent years, utilities have unleashed a flood of attacks on net metering to dampen the spread of rooftop solar, proposing to increase fees for net metering customers or compensate customers less for the electricity they generate.
Studies have found that net metering and distributed solar will have little to no effect on electricity prices for the vast majority of states, debunking claims by utilities that net metering customers drive up prices for non-solar customers.
Earthjustice At Work
In Nevada, Earthjustice and our partner Vote Solar have led the appeal of the PUC’s decision to end net metering, in order to restore consumer solar options, jobs, and health benefits to Nevada communities. Meanwhile, in Colorado, Earthjustice and Vote Solar helped negotiate a landmark settlement agreement that preserves net metering and ensured these distributed solar resources will continue to grow in the future. (More work on net metering.)
Utilities traditionally generate revenue from sales of electricity at a regulator-approved, fixed price—the more electricity they sell at this price, the more money they make.
This financial structure creates a disincentive for utilities to invest in energy efficiency and distributed renewable energy, since these would reduce the amount of electricity customers buy from the utility and thus reduce revenues.
Decoupling is a tool used to address this disincentive.
Under decoupling, regulators establish a fixed revenue for utilities to receive, which is set based on the utilities’ known cost of operation. This fixed revenue is “decoupled” from the volume of sales—no matter how much electricity utilities sell, their revenue will stay the same. Due to fluctuations in sales, electricity prices are occasionally readjusted to arrive at the fixed revenue level.
This restructuring of rates and revenues removes a key barrier to energy efficiency and renewable energy adoption.
Earthjustice At Work
In Colorado in 2017, the PUC approved a decoupling mechanism for the state’s largest electric utility, which Earthjustice worked with our partner Vote Solar to support. The Colorado PUC also adopted Earthjustice’s recommendations that benefit low-usage and low-income customers.
Four years earlier, legal work by Earthjustice in Washington state helped bring about what some called the most important utility regulatory decision in decades, when the Utilities and Transportation Commission adopted a comprehensive “decoupling” provision.
Despite industry and fossil fuel interests’ attempts to cling to an antiquated, polluting business model, the renewable energy revolution is inevitable. The groundswell of clean energy action is protecting communities from pollution, creating new jobs, and saving ratepayers money by avoiding costly, unnecessary dirty energy investments.
By Claire Wang, Policy & Legislation Intern
Claire was part of the Earthjustice’s Policy & Legislation team in Washington, D.C., during the summer of 2017. She is a junior at Duke University studying environmental sciences and policy, with a minor in economics. Claire previously worked for the Sierra Club and Greenpeace to advance renewable energy and fight fossil fuel expansion in North Carolina.