Big Energy's new bugaboo

Fossil fuel and electricity companies have declared war on people who use solar power for their homes

Published June 20, 2012 7:30PM (EDT)

  (Reuters/Rick Wilking)
(Reuters/Rick Wilking)

You can say one thing for fossil fuel companies and electric utility firms: Facts be damned, they know how to demagogue their political position in this era's us-versus-them terms.

In recent years, this faux populism has been focused on undermining so-called renewable portfolio standards -- aka state legislative mandates requiring utilities to get a certain amount of their power from clean energy sources. Deploying its bankrolled think tanks such as the Manhattan Institute, Big Energy has tried to turn the debate over these standards into the 21st century version of the archetypal Spotted Owl controversy -- a battle whereby effete environmentalists are depicted as prioritizing pie-in-the-sky tree-hugging to the alleged detriment of everyone else. In this new version of the cartoonish parable, the enviros' push for cleaner power is lambasted as a stealth effort to persecute Joe and Jane Ratepayer.

But now that most states have adopted renewable portfolio standards and empirical evidence has obliterated the fear-mongering narratives about them, Big Energy is onto creating the next boogeyman: people who buy solar panels (myself recently included!). In the industry's new fairy tale, solar enthusiasts are pampered, over-subsidized greedheads whose desire to do right by the environment and save money is consequently reimagined as a pernicious attempt to punish the poor through higher electricity rates. Summarizing this fantastical meme, the New York Times reports:

(As) tens of thousands of other residential and commercial customers switch to solar in California, the utilities not only lose valuable customers that help support the costs of the power grid but also have to pay them for the power they generate. Ultimately, the utilities say, the combination will lead to higher rate increases for everyone left on the traditional electric system.

“Low-income customers can’t put on solar panels - let’s be blunt,” said David K. Owens, executive vice president of the Edison Electric Institute, which represents utilities. “So why should a low-income customer have their rates go up for the benefit of someone who puts on a solar panel and wants to be credited the retail rate?”

As I've learned in working with the local solar company that supports my radio program, the utilities' argument is first and foremost undermined by the reality of the consumer market for solar power. The fact is, many solar integrators are now offering zero-dollars-down lease packages for homes to go solar -- packages that save ratepayers money over the long haul and eliminate a major income barrier to going solar. Yes, it's certainly true that one typically has to own a home (and thus a roof) to go solar, and that therefore homeownership unto itself is an income threshold. However, the blanket statement that "low income customers can't put on solar panels" is, to say the least, misleading.

Also misleading is the implicit notion that Big Energy would somehow be forced to jack up rates in order to recover the small amount of revenue allegedly lost to solar panel owners. A perusal of the profit margins of the fossil fuel and electric utility sector shows how absurd that idea is. These are the opposite of destitute industries subsisting on razor-thin margins; they have plenty of profit cushion to absorb an infinitesimal loss of revenue from solar panels. That means when they raise rates, they are protecting those eye-popping margins, not being forced into anything by any economic circumstance.

But for argument's sake, let's set those truths aside and get to the ideological heart of Big Energy's assertions, which revolve around what's known as net metering.

This system, mandated by states, empowers individuals with solar panels to put the clean energy they generate into the larger grid. Under many states' laws and regulations, these individuals are then paid retail rates by the utility company for the energy they generate. Rooted in fundamental fairness, the idea is that if someone with a solar panel generates a kilowatt-hour of energy and puts it into the grid, that person should be paid the same retail rate for the energy that the utility is going to charge one of its other customers for using it.

However, as Big Energy tells it, this principle of fair remuneration -- a principle that doesn't let the utility profit off of a solar owner's investment -- is all about larceny and freeloading. According to the Times, utility companies insist that having to pay retail or even wholesale rates "simply shift(s) the fixed costs of maintaining the electric grid, which are embedded in electric rates, to other customers."

Such a line of reasoning is an exemplary case of "fuzzy math" -- or really, arithmetic omission. After all, if it is true that solar owners end up circumventing grid-maintenance costs (a big "if"), then it is also true that utilities and their ratepayers are freeloading off all the externalized costs that their dirty energy forces solar owners (and everyone, really) to pay -- costs that solar owners aren't nearly as responsible for creating.

So, for example, Harvard researchers estimate that coal-based utilities are passing on $500 billion a year in externalized costs to everyone -- much of it in the form of public health costs for coal-related ailments. Likewise, natural gas utilities and their customers are passing on untold externalized costs to everyone else in the form of drilling/fracking side effects (contaminated water, ruined open spaces, etc.). And, not to be forgotten, customers of fossil fuel-based utilities are devoting more of their electricity dollars to creating future climate change costs. At the same time, these energy consumers disproportionately benefit from public subsidies that are, according to Bloomberg News, six times larger than the total subsidies for any form of renewable energy, solar included.

In each of these examples, solar owners are forced to pay the same costs as consumers of traditional energy -- even though by definition solar owners are generating less of those costs per kilowatt hour of energy used. And those costs are very real -- they are represented in (among other levies) higher health insurance premiums, ruined ecosystems and taxes to pay for comparatively massive fossil fuel subsidies.

Yet, since we don't deem those pricey items "costs" -- since they are externalized by Big Energy for society (read: individuals) to finance both now and in the long-term future -- they aren't typically counted in debates over electricity rates. Why? Because unlike, say, grid maintenance costs, externalized costs aren't paid by utilities or fossil fuel firms. They are paid by the public at large. And so we are expected to ignore them as if they don't exist.

They do, of course, exist. Pretending they don't, then, is simply another way to obscure who is really paying what for energy -- and obscure it in a way that specifically serves the fossil fuel status quo.

That's what the demonization of solar panel owners is really all about -- and we shouldn't be surprised when such hysterical assaults succeed in reducing America's already meager support for renewable energy. Big Energy has a lot to gain from keeping things the way they are -- even if that stasis is both ecologically unsustainable and economically unfair to the ratepayers Big Energy claims to care about.

By David Sirota

David Sirota is a senior writer for the International Business Times and the best-selling author of the books "Hostile Takeover," "The Uprising" and "Back to Our Future." E-mail him at, follow him on Twitter @davidsirota or visit his website at

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