Utilities find themselves in trouble because the growing green energy movement may undermine their traditional business model.
That could one day be bad news for investors in Pacific Gas and Electricity. (PCG -Get Report)
Merge Edison Company(ED -Get Report)
Arizona Public Service Company, a subsidiary of Pinnacle West Capital Corp. (PNW -Get Report), among others.
Of course, some utility companies, such as ASNRG Energy. (NRG -Get Report)
They may benefit from their extensive investment in renewable energy and distributed generation optimization.
But nationwide, from LED lighting to rooftop solar energy, consumers are looking for ways to reduce energy consumption or generate electricity by themselves. -
Analysts and researchers say this has had a significant impact on many utilities and poor customers who cannot invest in clean energy.
Rapid declines in the cost of renewable energy, especially wind and solar energy, are accelerating this trend, as consumers are often unable to benefit from the low prices of utilities that buy energy for a long time. -term contracts.
Tel Avis Miller, an analyst at Morningstar Power, said: "I think it has a significant impact on power companies everywhere. "
Miller believes that utilities will be able to adjust in the long run-
He points out that the term requires the joint efforts of consumers, shareholders and regulators, who often find themselves in trouble. -purposes.
California's market has changed most notably, at the intersection of sunny weather and progressive politics, with more than 12% of the country's population.
According to the Association of Solar Energy Industries, the country is also in the lead in solar energy production, with more than 13% of electricity coming from solar energy.
In California, all counties chose to bypass their utilities, so-
Called "Community Selection Aggregator", or CCA, as a retail power supplier.
Although consumers still pay for the use of infrastructure provided by their utility companies in these counties, CCA provides all the energy and sometimes seeks up to 100% renewable energy.
Although California has only five CCAs, nearly half of its 58 counties and more than 300 cities are in progress.
If all planned central clearing systems are in place, then companies like Edison, Southern California（EIX -Get Report)
And San Diego Gas and Electricity Company, a Sempra Energy Company（SRE -Get Report)
A report by Moody's Investors Service shows that 40% of its customers will leave.
Toby Shea, an analyst at Moody's, said: "This is a phenomenon that threatens to rule California as a whole. "
Although California's central clearing system may be the most productive, this arrangement exists elsewhere.
In addition to California, CCA is also legal in six other states, including Illinois, Massachusetts, New Jersey, New York, Ohio and Rhode Island.
CCA has existed for decades as a way of purchasing electricity at a lower price than existing ones, but the latest push is to use CCA to buy cleaner energy, even if it means paying higher prices.
According to Shea, when consumers withdraw from their utilities, they often leave behind trapped assets.
Utilities usually buy a lot of energy, so as energy prices fall, their prices will be much higher than market prices.
Although the cost can be pushed to any customer in the system, the increase in electricity charges will motivate the remaining customers to leave, possibly forming a cycle of interest rate increases.
Analysts see regulators as a potential solution, pointing out that if utilities can charge CCA customers higher fees for utilities infrastructure, they can solve the cost offset problem.
Shea believes regulators may achieve this growth in the next year or two, but says they will negotiate with the central clearing system and utilities. Getting a buy-
He said participation from different stakeholders could be difficult.
Of course, this is not the first time regulators have been involved in managing the changing market dynamics brought about by the green energy movement.
Regulators have been actively addressing the problem since analysts predicted a "death spiral" for roof solar power in the medium term. -2010s.
At least 16 states introduced new regulations in 2010, including the Arizona and Nevada bans.
Nevada has recovered-metering.
This article was originally published on July 5, 2017.