Yesterdays’ monopolistic utilities are dangerously outmoded. Many fear a “death spiral” as volatile fossil fuel prices hike rates and kill profits, and customers leave the grid for solar power, distributed storage, and smart microgrids. They dig in their heels. Sunny Florida’s utilities resist the rise of solar power. Nevada’s PUC allowed NV Energy to increase monthly fees charged solar panel owners by 40%, and limited net metering.
In contrast, Vermont’s Green Mountain Power (GMP) has announced a 2.46% rate cut, received Vote Solar’s Solar Champion Award, and became a certified B (for benefit) corporation. Rutland, GMP’s pilot city, is on track to 6 megawatts of installed solar power by 2017. A new pilot “eHome” combines solar with smart metering, a high-efficiency air-source heat pump and a mobile monitor-app for the occupants. GMP has pushed the legislature to increase net-metering, to allow more solar-powered homes to sell electricity to the grid. Alongside its 32 hydro power plants, GMP operates the state’s largest, 63 megawatt wind farm, generates “cow power” from dairy farms and maintains a network of fast electric vehicle charging stations.
GMP’s headquarters used to mirror a corporate hierarchy, complete with private secretaries, and large corner offices sporting private bathrooms and conference rooms. Today president and CEO Mary Powell works at a standup desk in the midst of the action. There are no private offices. GMP has a flat, democratic management structure.
Before the change, GMP asked for a 15 % rate hike from state regulators, but was granted only less than 3%. Here was the incentive then-CFO Powell needed to trim operating costs by $8 million and gradually introduce a more customer-oriented corporate culture with officers, herself included, in regular contact with customers. Management’s focus is now on serving customers and, “leveraging smaller resources, instead of being frightened by them.”
One of Powell’s goals is to prove that distributed solar energy works for every customer, not just the stereotypical upper-middle-class. GMP’s pilot eHome is designed for a working class family in a working class neighborhood. The company supports Vermont’s comprehensive energy plan, offers financing and works in partnership with local entities to increase socio-economic value, even as it keeps electric bills low and power outages to a minimum.
How can a utility manage all this and remain profitable? CEO Powell is not worried about power demand dropping because of distributed solar generation. Any loss in sales volume is more than made up as people convert from oil-fired space heating to electric heat pumps and switch to electric vehicles. The utility also directly benefits from its increased reliance on solar and wind. As Maine’s own PUC study on the Value of Solar Power shows, avoided market costs from solar average 13.8¢/kWh over 25 years. Not bad for a utility whose overall average retail rate is 13.95¢/ kWh. Avoided environmental and social costs add an additional 19.9¢/kWh, an important consideration for North America’s first B-corp-certified electric utility.
How come this works in Vermont but not in Maine? – That’s a good subject for public discussion.