In Austin, one of many programs offered by the city-owned electric utility is called Green Choice. Leslie Libby, manager of incentive programs, said it has been the most successful program of its kind in the country — made possible by the development of Texas’ wind energy industry.
Each time Austin Energy contracts for a new batch of wind farm energy, the utility offers its customers the option of rate stabilization: Anyone willing to pay a little more upfront would be guaranteed a stable electric rate for a number of years. “Commercial companies bought up a huge percentage of the wind power” in the last decade or so, she said. The utility would pay third-party companies to put in a wind farm and then would sell rights to that energy to their customers at a guaranteed rate. No fuel surcharge would be added.
“For almost all the batches we sold,” Libby said, the consumers “ended up saving money.”
Programs like that and many others have led Austin to set a goal of generating 35 percent of its electricity from renewable sources by 2020. That goal includes another one: to operate 200 megawatts of solar power, including a 30-megawatt plant that came on line in East Austin in December. The city doesn’t own it but has contracted to buy all of its electricity output for the next 25 years.
Contracting for the plant was one of the things that brought attention to Austin Energy in the last year or so. But probably the most inventive thing the utility has done is establishing something called the “value of solar.”
Libby explained that the utility called in highly respected consultants to study all the ways in which customers with rooftop solar systems contribute to the utility’s goals: Because the energy is generated on the site where it is used, the utility doesn’t have to build extra transmission or distribution facilities for it. There are environmental benefits. And because there are always losses along the line when energy is transmitted from place to place, that cost is also saved.
The calculation was “tricky”and a trailblazing concept, Libby said, but in the end, the city and consultant determined that that kind of solar power was worth 12.8 cents per kilowatt hour. Because residential rates are around 10.5 cents per kilowatt hour, the customers actually make money for each hour of electricity that they produce.
“We wanted to develop a rate so that customers who want to participate in solar would have enough of an incentive to do so,” she said. “When you come down to it, it makes total sense.”
Few people in Texas are taking bets on what is going to happen to Energy Future Holdings. David Power said the huge electric company is “writing off debt at a furious pace and issuing bonds at astronomical interest rates.”
The company’s generating arm, Luminant, is fighting suits by environmental groups as well as the EPA’s ongoing efforts to enforce new (and, many believe, long-needed) rules on various fronts regarding pollution, mostly from its coal-fired plants, which include some of the dirtiest in the country. EFH is generally believed to now be worth much less than what investor groups paid for it in the leveraged buyout in 2007. The Dallas Morning News wrote last year that the EFH situation — with the state’s “principal provider of electricity … in deep, debt-driven financial trouble” is something that no one has ever seen in the power industry.
So it’s perhaps not the best time to start asking the EFH companies what, if anything, they plan to do to encourage and take advantage of solar power in the future. (Luminant is already one of the largest purchasers of wind power in the country, but not of solar power.) A spokeswoman for Luminant said, “Because development plans are competitively sensitive, we don’t discuss any specific plans we might have.”
On the other hand, maybe this is the right time — especially if the company ends up under partial or complete control of some government entity due to financial failure.
“It looks like they have a limited number of choices,” Power said. “Bankruptcy — though that doesn’t necessarily mean the company goes away. A bailout, either by the federal or state government. Or the PUC could say, we really need to keep the plants online … and pay them to stick around.”
Could that result in a situation where the company could be pressured to turn more toward use of solar and other renewable energy sources in addition to wind? “It could,” Power said. “It would actually be a good pressure point. If you look at their generating portfolio, they’re pretty old and dirty.”
In the end, the only thing that might work to bring utilities like EFH further into the green world would be for customers to move their business to other companies that do employ and encourage solar power generation.
“If you can get enough customer groups together,” that might work, Meehan of the Environmental Defense Fund said — but he doesn’t figure it’s likely.
The PUC has scheduled a meeting for later this month to discuss the first Brattle Group report. Power and others are hoping to convince them to also talk about the second report — the one that recommends Texas get busy working on solar power generation.
Environmentalists say the PUC has had the authority for years to mandate that all utilities in the state move in that direction. Commissioners have responded that they believe they have the power only to set targets, not mandates. Anything stronger would take new action by the legislature, commission chair Donna Nelson has said — and that hasn’t happened.
Adair, Burnam’s chief of staff, said the only clear way he sees to push huge utilities toward major solar power development “is for customers to go to the [retail power companies] and say, ‘I want my kilowatt hours to be from 100 percent renewable sources.’ ”
The price of solar panels is dropping fast enough that a scenario like that “is not that far off,” he said. Once solar becomes clearly competitive in price, he said, “Customers will be voting with their pocketbooks.”