However, a proposed Tennessee Valley Authority rate change could mean less bang for your time or your buck, and may inadvertently target low-income homeowners.
The dilemma for utility companies
TVA pricing and contracts president Cass Larson, in a blog post, described the dilemma energy-efficient technology presents to utility companies.
“Today, consumers can lower their bills through energy efficiency and even make some of their own energy,” he wrote. “Power companies that don’t adapt and reinvent themselves won’t be able to ensure the safety, reliability and resilience consumers have come to expect.”
It’s hard to tell exactly what the increase could look like and who it could affect. The public corporation is in talks with its distributing utility customers to determine the best course of action, which may vary between local distributors
“These are people who already struggle to make ends meet day to day,” Angela Garoni of the Southern Alliance for Clean Energy told the TVA Board in November.
“To increase fixed charges on customers to such an extent that they are actually punished for saving energy, then you’ve made a disincentive there and these are already people who need every bit of incentive, every bit of money possible,” she said.
Environmental groups speak
The proposal has drawn the ire of environmental groups, homeowners, and solar power users. People lined up at a TVA Board meeting in Counce, Tennessee, in early November to call TVA out for what they perceive is an energy “monopoly.”
“If you structure the rate change in such a way that you put more on the fixed charges, you actually de-incentivize the ability to invest in energy efficiency, holding people as captive customers,” said Steven Smith, also of the Southern Alliance for Clean Energy.
Jeff Moore, an insurance agent in Counce, said he unplugs every device in his home and office before he leaves.
“TVA should encourage customers that conserve energy and lower their bills, not penalize them by having bulk pricing, he told the board. “These fixed charges will shortchange individual customers for not being mega users. Mega users should not get discounts for being mega users.”
Doug Calimer of Wayne County said he uses solar energy to power his house and sells a portion of it back to TVA. He told the board he is concerned the decision will prevent other customers from getting fair credit value for their solar investments.
CEO Bill Johnson said fair credit value is the exactly what TVA wants. “But, here’s what we’re always concerned about: that benefits to participants should not come at the expense of non-participants,” he said. “To the extent we subsidize any form of generation, we are benefitting one group at the expense of another.”
He added that TVA does not have an energy monopoly because its distributing utilities are free to seek another contract. Individual customers, however, are bound by their local utilities.
Knoxville Utilities Board
Some local utilities have already been increasing their own fixed charges, and may pass on further TVA hikes to their customers.
Knoxville Utilities Board spokeswoman Stephanie Midgett said KUB would recover any TVA increase through its customer rates, “but it’s impossible to say how that might be structured without knowing more about the size and structure of TVA’s rate change,” she said.
TVA executives maintain the fixed rate proposal is not an endeavor to boost their revenues, which will remain neutral.
The corporation has provided few other details about the proposal to ratepayers, but retail rates created by the behind-the-meter increase would likely hurt supplemental solar users who want to remain affixed to the grid the most.
A TVA spokesman said a customer who has made energy-efficient upgrades or practices energy-saving behaviors may still have lower rates than their neighbors, but it is possible that they may not be as low as before.
In his post, Cass justified the fixed-rate proposal by saying the people who pursue energy efficiency and solar technology “are the companies and people who can most afford it,” leaving those who cannot afford to invest in the technology to make up the difference. TVA executives have echoed the reasoning.
But the statement is counter-intuitive to programs TVA and its distributing utilities have adopted to assist low-income families in weatherizing their homes, like “extreme energy makeover” programs and TVA’s e-score rebate program.
Even before many household energy upgrades were available, however, data from the National Energy Information Administration shows low-income American families used amounts equal to or less than their median or higher-income counterparts.
A spokesman for TVA could not specify whether the utility is able to discern from behind the meter between a low-income family using less electricity from a higher-income family that has made energy upgrades or implemented solar power.
TVA is not the first company to consider fixed rates. Efficient technology the Department of Energy has brought to the commercial market has reduced rates for utility customers across the country, and fixed rates seemed to be the preferred response by public and private utilities.
More: Free Solar Estimate
Cass said the company is well-positioned to absorb declining load growth. The company reduced costs by about $800 million this year and invested in new technology that may lower rates in the future.
Chief Financial Officer John Thomas said TVA’s load and revenue have gone down in tandem. “That’s the result predominantly of energy efficiency standards coming out of DOE.” He said TVA does not need additional generation because the losses are linked to load reduction.
But, Cass said, as technology advances to allow homes and businesses to use less and less electricity, usage-based rates may not cover the costs of maintaining the grid for long.
“We need to recognize how important grid services are for those using new technology and ensure our pricing model protects the reliability and resilience the grid offers,” he wrote.