Electricity’s fair factor
New energy strategies can benefit from a heritage of concern for every co-op member
One of the most basic ideas of electric cooperatives is that we provide affordable and reliable energy to our members. It started more than 75 years ago when a wave of farmers across the country began asking a simple question: how do we get electricity to our farms?
The traditional utilities at that time did a simple cost-benefit analysis and determined that it was not profitable to build electric lines into the rural areas. So the farmers decided they would do it themselves. They began forming electric cooperatives to build the power lines and share the expense of construction.
In the energy world today, there is some discussion about changing the way we charge you for the electricity that you use. One of the ideas from this discussion is called net metering.
Net metering is a technique to encourage the use of renewable resources, such as a bank of solar photovoltaic panels someone might install at their house. Net metering would allow excess power generated by those home-based solar cells, to be sold back to the utility at the retail rate. Sounds like a great idea, but there are important concerns that the electric co-ops have.
First, the energy that is purchased back by the utility at the retail rate is not fully recovering the costs associated with building and maintaining the electric lines going to the home. In fact, the energy portion offset by net metering is roughly one-third of the total retail electric bill. The big concern for the co-ops is this: those uncovered costs must be recovered by members who are not selling any electricity back to the utility.
Another major concern for cooperatives is that the homes installing these panels are not representative of the whole. As cooperatives, we believe that there should be fairness associated with our rates. We don’t believe that any member should pay for the decisions made by another. Therefore, as we begin working with the leaders of our state during the legislative session on net metering, and other issues, our priorities will be the same—your co-ops will support policies that maintain fairness, affordability, and reliability of the electric service to your home.
You can get more background in this month’s The Future of Electricity column.