The most frustrating thing about rising fuel prices is that we are powerless to do anything about them, at least in the short term. We know potential solutions exist, but they always seem to be blocked by those who have an interest in keeping us dependent on gasoline. So we have no choice but to pay whatever they charge.
A similar dynamic affects what we pay for basic electricity. In North Little Rock, for example, electric rates jumped an average of 38 percent this month, and, as with the price of gas, there is very little anyone can do about it. City residents are at the mercy of the utility, and even a frugal, responsible consumer can only do so much to keep the bills down.
But it doesn’t have to be that way. Arkansas already has laws in place to empower homeowners, farmers and businesses with incentives to reduce electricity demand and share excess supply. All of us could generate energy, sell it back to the grid and achieve an equal footing with the powerful utilities.
Of course, the utilities don’t want that to happen, which is why they have worked hard to prevent it.
The concept is simple. It’s known as net metering, and it is derived from the little-known fact that your electric meter can operate in two different directions.
We’re used to seeing our meters turn as we take electricity from our local grids. But the meters would spin in the opposite direction if we created more energy than we used, sending it back to the grid for others to consume.
You could put solar panels or wind turbines on your roof or in your fields, for instance. If you’re using a lot of electricity on a particular day, those systems might offset the power you are taking from the grid, reducing your utility bill.
Better yet, when your electricity consumption is low, the excess energy you create could go directly to the grid, turning your meter backwards and saving you lots of money — possibly earning you a net profit.
That’s a real-world market incentive to encourage all of us to invest in renewable energy systems and conserve electricity.
Imagine sitting in your office on a sunny winter day, knowing your lights and air conditioning at home are off, and your solar panels are turning your electric meter backwards.
However, if you did that here today, you wouldn’t receive any financial benefit, because the utility is entitled to take the surplus energy you generate — and sell it themselves.
Almost six years ago, Arkansas adopted a law requiring the state’s utilities to offer net metering for solar, wind, hydrothermal, geothermal and biomass systems. But according to a Nov. 2006 report by the Network for New Energy Choices, “In an effort to appease utility concerns that net metering represents a subsidy to participating customers, Arkansas’s commission allowed the state’s utilities to seize (without compensation) any excess electricity generated by customers at the end of every month. Denied fair compensation for excess electricity, only three Arkansas customers have enrolled in the state’s program since it was initiated in 2001.”
Well, sure. If you remove the incentive — the whole point of the program — who is going to participate?
The counter-intuitive nature of Arkansas’s program earned it an “F” in the report, along with special attention in a chapter entitled “Worst practices,” which noted, “The Arkansas Public Service Commission (APSC) failed to establish effective net metering programs largely because of undue deference given to utilities during the rulemaking process. … APSC’s decision to give utilities net excess generation at the end of each month … can be traced to utility concerns about cross subsidy issues and fears of lost revenue.”
Shouldn’t the Public Service Commission be more concerned about consumers’ lost revenue, like the extra 38 percent North Little Rock ratepayers are coughing up?
Last week, Gov. Mike Beebe followed through on a campaign promise to propose phasing out the sales tax on utilities for manufacturers. But those manufacturers might appreciate net metering even more if it meant they could reduce electricity costs or even turn a profit on energy generated on their substantial properties.
At least net metering would offer businesses, farmers and homeowners a responsible response to increasing energy costs. In states where more functional net metering programs were adopted — especially when accompanied by rebates and tax incentives for renewable energy investments — the numbers of net metering customers and solar panel systems have increased dramatically.
Competition, after all, is the key to keeping the utilities honest and efficiently determining the true, free-market value of the electricity we consume.
As with the cost of gasoline, we don’t have to be at the mercy of the monopolistic energy providers. We only have to overcome their selfish perversion of the political system, which blocks the most logical solutions and deprives us of our independence.