Electric utilities have historically been islands of constancy amid the business world’s sea of change. I have consulted for and with them for 21 years, seeing my share of business plans that could be summarized as, “Whatever we did last year, do a little more of it this year – but not too much.”
The situation today is entirely different – there has never been more a dynamic time than 2016 in the electricity business. For decades, U.S. electricity use grew about 2 percent to 3 percent per year. Utilities steadily built more coal plants and wires to keep pace, earning steady, safe returns on their incremental investments. Not any more.
Energy efficiency gains and structural changes to the U.S. economy have kept electricity consumption essentially flat since 2007, though our economy has grown by 10 percent and our population by 8 percent. U.S. utilities now invest $7.6 billion a year helping their customers use electricity and natural gas more efficiently, not because they are short of capacity, but because saving energy is far cheaper for the utility than producing more, better for customers’ bills and better for the environment.
Over the past decade, 15 percent of all our electricity production shifted from coal to a mix of cleaner natural gas and renewables. The era of new American coal plants is effectively over. Old ones are being retired rapidly to save money, whether or not the Environmental Protection Agency mandates cuts in greenhouse gas emissions. Our power plants now emit 18 percent fewer greenhouse gas emissions than they did in 2005, and even more rapid reductions await us in the years ahead.
Fortunately, wind energy companies are bringing huge amounts of new power onto the grid for 1.9 to 3.5 cents per kilowatt hour – far cheaper than building new fossil fuel plants. Many new solar contracts are coming in at 4 to 5 cents/kW – not bad when utilities can turn around and sell the resulting power for twice as much or more to pay for maintaining and upgrading power lines, smart meters and buildings.
In 2006, about 30,000 U.S. homes had roof-top solar electric panels. Today, more than 1 million do. Millions more homeowners are getting price quotes and weighing their options. That pace will accelerate as prices continue to fall and accompanying battery systems and electric cars get cheaper and better. Many people will elect to disconnect from the utility altogether as fixed monthly charges continue to rise to pay for maintaining outmoded investments made decades ago.
None of these dramatic changes resulted from applying conventional, safe, familiar thinking to the utility business model. Indeed, these changes have occurred largely in spite of, and against the wishes of, many who have worked in the utility business or served on their boards of directors for decades. Those who drive down the road navigating with their rear view mirrors crash on twists and turns in the road ahead that didn’t used to be there.
Your ballot for the La Plata Electric Association board of directors election will be arriving in the mail this week. It’s shaping up to be a spirited and competitive election, thankfully without the massive ad budgets and partisan vitriol of our presidential elections! A few thousand votes in total will decide how and where $100 million is invested annually here in our local communities, so this is the wrong year to toss your ballot or ignore it. Go to www.lpea.coop/company_info/board/annual_meeting_notice_statements.pdf and take a look at the candidates who are running.
You’ll find four candidates who are each touting more than 40 years of experience in the rural utility business, ranching or the legal and accounting fields. Honorable men all, but there are others better equipped to embrace the rapidly changing dynamics of today’s utility business.
I’d urge your enthusiastic support for Mark Garcia (District 1), Lori Smith Schell (District 2) and Jack Turner (District 4) instead. Garcia and Turner are recent incumbents; their science and public policy backgrounds and their experience serving on the LPEA board last term will be invaluable to confronting the challenges that lie ahead. And Schell’s experience as an energy economist in the renewable energy, natural gas and oil sectors throughout the country gives her unmatched credibility and knowledge in the field.
As Albert Einstein said, “We cannot solve our problems with the same thinking we used when we created them.” New entrepreneurs and leaders from the private sector have brought much-needed new thinking to the utility business at a critical time in its history. They are agents of change, investing in cleaner, greener, more nimble infrastructure producing electricity close to home. Let’s keep that momentum going right here in Southwest Colorado. Let your voice be heard in the upcoming LPEA election.
Chris Calwell is a Durango-based co-founder of Ecos Research,an energy efficiency consulting firm. Reach him at ccalwell@ecosresearch.com.
