Prospects for Public Power and Distributed Renewable Energy

• Date: 01 June 2015

6-2015 NEWS & ANALYSIS 45 ELR 10537

Prospects for Public Power and

Distributed Renewable Energy

by Uma Outka

Uma Outka is Associate Professor at the University of Kansas School of Law.

I. Introduction

Recent growth in rooftop solar energy has caught the

attention of utilities. Every customer who generates her

own electricity is a customer who is not buying it (or at

least as much of it) from the power company. Indeed, if she

lives in one of the ma ny states that permit or require such

arrangements, the utility may have to buy back any excess

electricity that her solar system produces.

is kind of distributed generation (DG) of electricity

stands in sha rp contrast to what is largely a centrali zed

electric power grid in the Unite d States. Most electric

power is generated at large power plants and transmit-

ted across high-voltage power lines to load centers, where

people live.1 DG ips the model to generate electricity

on a small scale on site or very close to where t he power

is used.

As DG expands, understanding the lega l and practi-

cal barriers to its eective and economically sustainable

proliferation becomes increasingly important. Renew-

able energy advocates cheer the growt h in DG, but utili-

ties have wa rned t hat a “death spiral” eect could result

from their loss of revenue.2 At the center of t his cloud of

mixed messages is the increasing number of consumers

who would like to utilize distributed electricity, if they

can make it work. With federal incentives and more varied

nancing alternatives, such as the third-party rooftop solar

lease, utilities are beginning to recognize that the time has

arrived to adapt and adjust.

In keeping with this new realization, a report released in

2013 by the American Public Power Association (APPA),

a trade group, took up the subject of DG, contrasting the

1. See N R E L. (NREL), E A: S

P   E G 1 (2010).

2. See, e.g., William Pentland,  ,

F, Apr. 4, 2014, at http://www.forbes.com/sites/williampentland/

2014/04/06/why-the-utility-death-spiral-is-dead-wrong/ (observing that

“[f]or more than a year now, the electric utility industry has been obsessively

speculating about an impending ‘death spiral’ driven by customer adoption

of distributed generation technologies,” and countering this view).

positions of investor-owned utilities (IOUs) a nd publicly

owned utilities (POUs) with regard to the trend toward

increasingly proliferated DG.3 e classic public utility is

not public in the traditional sense, but instead is a for-prot

IOU with a service territory monopoly a nd obligation to

provide electricity service in ways that are reliable, aord-

able, and nondiscriminatory. e term public power instead

references utilities that operate under nonprot public

ownership. POUs have long been uniquely situated within

the electricity sector as a general matter, and that is true as

well in the specic context of transition to DG.

On the one hand, the APPA report warns that DG poses

a wide range of challenges for public power, not unlike

those heralded by IOUs. On the other hand, the report

concludes that “publicly owned utilities are better posi-

tioned to deal with these challenges.”4

is Comment discu sses public power’s positioning

in relationship to b oth the challenges a nd possibilities of

DG. Fir st, it oers a brief overview of the role of POUs

in the electricity sector as a whole. Next, it hig hlights rel-

evant aspects of the leg al environment for POUs. ird,

it look s at DG innovation by POUs. Finally, the Com-

ment weighs some of the advantages a nd cha llenges par-

ticula r to POUs that inform prospects for public power

advancing DG.

II. Snapshot of Public Power

Across the United States, over 2,000 electric utilities are

nonprot and community-owned, operated by local gov-

ernments. ey comprise some 60% of all electricity pro-

viders.5 ese utilities are most numerous in the Midwest,

but they are also common in the eastern United States, and

can be found in every state except Hawaii.6

3. A P. P A’ (APPA), D G: A

O  R P D 25 (2013) [hereinafter

APPA, 2013 P R].

4. Id. at 25.

5. Diane Moody et al.,    , 26 E J. 85

(2013) (citing U.S. Energy Information Administration (EIA) data).

6. APPA, 2014-15 A D  S R: Public Power

 42 (2014).



       



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