By Protecting Utilities, We Make Communities Vulnerable

“Revenue Decoupling” programs are the latest in a long series of egregious schemes designed to prop up an electric-utility industry that is long overdue for a restructuring. Such programs are the brainchildren of respectable sounding organizations like the Edison Electric Institute and the Electric Power Research Institute, whose memberships are made up of our nation’s most powerful electric utility companies. Both organizations are now chaired by the same man – Jeff Sterba, who is also the head of PNM, New Mexico’s largest investor-owned utility.

New Mexico passed a utility revenue decoupling bill earlier this year, under logic that went something like this: Electric utility companies earn their revenues from the sale of energy, but as consumers become more efficient, sales decline. Therefore, helping consumers become more energy efficient is counter to the utility’s interest. To fix that, we simply decouple the revenues of the utility from the amount of energy purchased by their customers.

Once this decoupling is in effect, the utility can then set up energy efficiency programs to help their customers use less energy. The cost for the utility-run efficiency programs are paid by customers, through surcharges on their utility bills, and the utility is also entitled to collect money to pay for lost revenues resulting from selling less energy.

Does that make sense? The logic was good enough to receive the endorsement of the Obama campaign: His energy platform specifically endorses revenue decoupling, and promises grants and assistance to states that implement them.

But, here’s another perspective:  The real name for such programs should be “Revenue Guarantees”. As residents of a community begin to suffer from higher energy costs, the most powerful tools they have are to reduce energy use, or switch to a different energy source. Either option should reduce the flow of energy dollars leaving the community to pay the electric company.

But with a revenue decoupling law, the savings enjoyed by one resident are simply billed by the utility to the other residents, pitting one community member against another and ensuring that the community, as a whole, continues handing over large sums of money to the utility. As utility prices rise, the sums of money get larger, no matter what the residents do to reduce their use.

We must hope that revenue guarantee laws like the one passed this year in New Mexico will be the over-reach that wakes us up to the perverse power of monopoly electric utilities. Our revenue guarantee law was, in fact, cited by Santa Fe County Commissioner Paul Campos as one of the reasons for his initiative to create a public power entity in Santa Fe. And, public ownership of power lines is probably the best of our remaining options for curbing the abuse of our political system by electric utilities.

As our country spirals deeper into economic hardship, the potential to create jobs, renewable energy, and other benefits from taking the electric grid public, and operating it in the public interest, are simply too big to ignore.

The video newscast that includes this commentary is posted here.