171: Paying Whose Fair Share? Solar Cost Shift Debate

On today’s episode of Still To Be Determined, we’re gonna be talking about who should pay for the grid and how and when customers are leaning away from purchasing. Power from producers, large producer companies who should shoulder that burden. Welcome everybody to Still To Be Determined as usual. I’m Sean Ferrell.

I’m a writer. I write some stuff for kids. I write some stuff for adults. That includes my just recently released new series, the Sinister Secrets of Singh, which is available in bookstores now. And with me, of course, is that Matt from Undecided with Matt Ferrell, which takes a look at emerging tech and its impact on our lives.

And Matt, how are you doing today? I’m doing well, doing pretty good. It’s a, it’s a beautiful weekend. Happily here in New York City, we’ve returned to actually having breathable air. It was a little rough. That’s good thing. Yeah, it was a little rough going for a week. It was a week of basically taking the pandemic and turning it on its head.

Mm-hmm. It was. We used to be afraid that everybody else’s breath would kill us, and now we were worried that every breath we took would kill us. And, uh, I had a week of that combined with moving furniture out of my living room, which through a basement entrance, and I banged my hand against a brick wall and was bleeding.

I banged my head against a doorway and scraped two large mihail Gorbachev sized. Things off the back of what is a rather bare bear head, and I had a new book released, so all in all it was a good week.

Before we get into today’s discussion, which is about Matt’s most recent video, which is, as I mentioned about solar panels, wanted to share a quick thought from a previous episode. This is from episode one 70, and lately we’ve been having discussions. About AI and its impact on our lives as it gets ready to exterminate us.

I mean, as it gets ready to take over. No, I mean, as we try to figure out how it might be used in ethical and helpful ways as opposed to undermining people’s lives. And taking work away from people. And there was this comment from Daniel Boger that I thought was helpful to me in sending a kind of grounding message.

Daniel wrote Chat, G P t and other AI remind me a lot of the early days of Wikipedia, people would use Wikipedia as a primary source of information, which was bad because anyone can edit it. But now Wikipedia links to other sites to back up what it says. It is a great research tool to get started before digging into other sources.

If chat G p T and others are forced to give sources, it could follow the same path. Yeah, I thought that was like a good reminder that this is not the first time that new technology has sent all of us scurrying out into the wild screaming, the sky is falling, the sky is falling, and then we, yeah. Reclaim control.

Yeah, exactly. So today’s episode we’re gonna be talking about Matt’s most recent episode, which was released on June 6th, 2023, why solar panels aren’t unfair or a scam. And this was a very, I wouldn’t say hotly debated episode, but it garnered a lot of comments. Yeah, you had a pretty, pretty sizable response on this video.

Yeah. But a lot of the commentary was, I was happy to see in the vein of. Yeah, we really need to look at this. We really need to figure this out because we can’t cut off an emerging technology in the name of sustaining old models. Yes. And that ultimately it, it goes back to in some places where there are actually laws that when you have that large conglomerate, like Friends of Nature says, burn oil.

Yeah, there are some states that require disclaimers who are the major donors of Friends of Nature, and it says Exxon and Mobile. And you’re like, oh, okay. So exactly. I get it now. And a lot of these echo friendly shells that are actually promoted by large, let’s call them the traditional power suppliers, traditional, um, corporate entities, and.

We’ll stay away from calling them just inherently evil. Like I’m not trying to make that claim. That’s a different video. That’s a different discussion. Yeah. Yes. But they’re looking at bottom lines. They’re looking at investors and they are making decisions to support those and the availability of shells that look on the outside, like pro environment, like oil companies can legitimately say.

We are utilizing the gifts of the earth in order to support people’s lives. Yes, they can legitimately say that that is not a lie, but it is a very careful framing. And so we, I’ve seen this before in advertising, which is, there was a YouTube ad as I was watching actually one of your videos. There was an ad that was all about, you know, images of sunshine and clean beaches and talking about sustainable, renewable, forever energy sources.

And it was from Bell Petroleum. So it was BP saying like, don’t worry, we got this. And it was this video of yours is right in that vein of companies. And states largely like this is, this goes back to the money connections between political figures and large corporate donors and relationships that don’t always look at what is the best step now in preparation for step 10 later.

This is what’s the best step now to make sure that the steps we’ve already taken weren’t useless. Exactly. Yep. And so, My question to you, my first question is, you talked about lost revenues. Mm-hmm. And. From the corporate side, and I just would like to think a little bit, and I bring this question up without really having an answer myself, but are lost revenues quite the same as lost costs?

In other words, from the corporate perspective, they’re not making as much money. Do their maintenance costs and everything else stay the same or is less usage of. Various aspects of the grid also lower certain costs, or is that something that you can’t really speak to? Well, it’s, I’m not an expert in this, but in the research we did on this, it’s, it comes down to the grid is like a fixed cost.

It costs X amount of dollars to install a certain por portion of the infrastructure and then maintaining it, you can really budget for exactly what’s needed to maintain that. It’s not like a highly fluctuating cost. Where we’re pulling energy from the grid is where everything goes like fluctuating.

It’s like all over the place. So the question then comes in like, well, how do we pay for the maintenance of the grid? Is it, do we assess everybody affixed? Fee for maintaining that, or do we do it kinda like they do now where it’s like they’re kind of baking in the maintenance costs into those delivery and supply charges that we get on our bills?

It’s kind of rolled into that. That’s part of the problem. It’s like I use less electricity, which means I’m not paying my fair share towards the maintenance of the grid. Well, you could fix that by doing a fixed cost, but if you do a fixed cost, there’s evidence that shows that disproportionately impacts lower income households because of the way you’re shifting things around.

So there’s this huge question as to like, how do we balance this in a way that makes sense so that we’re not cost shifting to another from one customer to another. This gets like the whole point of the video was exploring the why a prosumer, somebody who’s actually like a little mini power plant. It’s not affecting the grid in the way that you think it does.

It’s not shifting the cost the way you think it does because it’s no different than you and your apartment buying a whole bunch of new appliances that are super energy efficient and you cut your energy use in half. Yeah. That’s no different than me using solar panels that cover half of my electricity cost.

We’ve both reduced how much energy we’ve used from the grid. But for some reason my solar panels are costing my neighbors more money. But yours appliances are not, it’s like, it doesn’t make sense the way the framing the is made. Yeah. Right. It’s part of the problem of, it’s like I go back to Steven Colbert, like in his early show where he was the right wing Republican, just kind of like super conservative.

He talked about truthiness all the time. Yeah. On that show. And it’s like, that’s what this is. So it’s like there’s an, there’s an element of truth in that there’s a seat of truth within the cost shift Yeah. Argument that makes you go Oh yeah. And it’s easy to buy into cuz it’s a very simple concept to go.

Yeah, that makes sense. But then when you start to see how it actually works out and how the costs are, how the utilities are paying for things, it’s like, no, that actually kind of breaks down. It doesn’t work the way you think it does. Yeah. But they’re framing it that way to obfuscate the actual issues, just like you said, to protect their investments in existing infrastructure, to protect their current monopolies.

To protect, to protect their current revenue streams. Yeah. It’s, it’s really them. It’s not lost revenue. That’s one way I would reframe it. It’s because it’s, they’re projected revenue. They’re making less than they projected. They’re making less than is projected and ultimately they’re making less than they want.

And that, yes, like that feels like that’s part of it is, yeah, it’s really hard to feel bad for corporations that are making millions upon millions of dollars and they’re saying, well, we have to pass this usage rate, this, this grid access rate onto consumers. And it’s in the name of protecting those revenues and the profit that they make.

It’s hard to, it’s hard to see them as the victim here. And there was a lot of commentary which was along the lines of these companies know they’re on the losing side of this argument. And what they’re ultimately just trying to do is slow the process of adoption until they have the ability to build the power farms.

Yep. That they would need in order to remain the only power supply. So a state, like you mentioned, Mississippi, it sounds very much like all Mississippi is trying to do is get people to not put solar panels up. So that they can do something where they can say, now we’ve converted to solar and now we’re providing you with solar power.

Correct. It’s, they’re trying to protect their own investments, their own infrastructure, their own profit margins. Th this is, we’re an ama in the middle of a massive transition right now. Energy transition. Yeah. And it’s has, it’s not just renewables, it’s just the way everything is shifting. It’s turning from kind of like gigantic grids that are internet connected into literally thousands of microgrids.

Right. That can work together to form a grid. Yeah. And that distribution of power generation is something that was never possible in history. And so it’s like we’re going through this upheaval where utilities don’t wanna see their control go away, and so they’re trying to slow the role. But this is where it gets super thorny.

And I saw it in the comments myself because. There is a potential of cost shifting once you get past a certain percentage of residential homes. Sure. With solar panels, it does potentially become a problem down the road. Right? Right now it’s having no impact, so why would you fight it now? It’s, it’s like, it’s like dials.

It’s like public policy needs to be like you, you need to incentivize it enough right now to let the adoption kind of increase, cuz more people that adopt it. The overall cost of getting solar goes down, makes it more equitable, right, for more people. And as it starts to get better, you start to change the dials and shift things around a little bit so that you can dial it down to get ahead of any cost shifted in your shoe down the road, right?

But the argument’s being made as if it’s a problem today and it’s a problem way down the road. Right. So it’s like that’s the part that kills me. It’s like you’re, you’re gonna disincentivize trying to get residential solar going, which is gonna keep prices of getting solar incredibly high. It’s also gonna lock in prices in a way that’s gonna make it inequitable for people.

Who do like at lower income that do wanna get into solar now because they don’t have the benefits that the rich people had right a decade ago. It’s like there’s so many reasons why you shouldn’t do it the way that they’re doing it and need your reaction to this is not the right path. One of the things, and as I walk through this, um, your video is extremely informative and I’ve watched it several times.

It is still full of concepts that are a little hard to like quickly. Absorb. Yeah. And be able to regurgitate. So as I walk through this, if I misstep, please jump in and correct me. But one of the arguments in the video was it is cost shifting and unfair when you have on power bills, a grid access fee, which is applied flatly across the board because the wealthy who can afford to put solar panels on their homes, And may in fact be using more power than a lower income family or the elderly.

I believe you even said at one point communities of color use less power. Yeah. So the wealthy person with the six bedroom home who is burning more power but also has solar panels, has an extra $50 flat grid access fee. And then the poor community. Has the same $50, but they are using less energy. So they are percentage wise on their bill, they are paying more for that grid access fee.

Correct. Yeah. Correct me if I’m wrong. Doesn’t the power company know how much power you have used when you have solar panels? Not how much you’ve just consumed from the grid or added to the grid, but overall they know what you’ve used. Yes. Yeah. They know exactly like how much energy I’ve gener. They know how much energy I’ve put into the grid, how much I’ve pulled from the grid.

They know the differences there. So it’s like right the way net metering works, this is where it’s like all over the map, but here in Massachusetts it’s a one-to-one credit, right? And this, this is one of those people will argue against cost shifting. They think one-to-one net metering credits are a bad thing, and I’ll get to that in a second.

But it’s for every kilowatt hour I put into the grid, it takes one kilowatt hour off my bill. Supply and delivery charges both just like erased for that one kilowatt hour. So that’s where the argument comes in of like, you were still using energy from the grid, but you’re actually not paying for the maintenance fees and the delivery charges and the grids because, because of how it got credited back to you.

Right. Other states do it in a different way where they’ll pay you the wholesale rate, they’ll basically pay you as a homeowner, like they would pay any other. Power plant, right? So they’re not, they’re not reimbursing your supply charges. They’re reimbursing your, your generation charges, sale charges, right?

Right. And so that is actually a more equitable way to do it. And so for me personally, I think the way Massachusetts does it should be changed. I don’t think it should be a one-to-one, and it needs to be adjusted, but it’s not like it’s causing harm at the moment. Right. And it’s something that we need to start dialing back slowly over time, because as things, the adoption gets higher.

Cause Here’re in Massachusetts, as I pointed out in the video, it’s like 4.2% penetration here in, in Massachusetts. Mm-hmm. We’re the second most populous solar state in the country, which I find bizarre. It’s remarkable. Arizona. Massachusetts, it’s not a big state. Yeah. No, but it’s because it has, it has good solar policy right now, which is really kind of getting the, the.

The momentum. And so at some point, Massachusetts is gonna have to do what California started to do, where they start to dial it back a little bit to make it a little more fair. But there are states that just don’t have net metering at all. Like they don’t give you any kind of credit on your bill. Right.

And it’s like, so there’s states doing things that are like, that are horrible. There’s states like Massachusetts, which are at some point gonna have to rethink how we’re doing it because at some point it could become problematic. But it, it seems to be for equity. Yeah, it would be. And maybe this is what California’s now doing, and maybe I’m just like coming up with this brilliant light bulb idea of my own without realizing that I’ve just stepped into what California is doing.

Yeah. And what you’re describing would be more equitable, but it seems like it would be more equitable to say, we are going to reimburse you as if you’re a wholesaler. Mm-hmm. And we are going to apply that as a credit against the bill as if you were just a consumer on the usage side. Mm-hmm. And then apply a tax, a fee, a percentage on not the final bill, but on the usage.

Okay. Because then everybody would be paying, if everybody has to pay, let’s say, a 5% usage fee, a grid access fee, a 5% on your usage. But that’s, but that’s where a larger home, which is using more power, would be paying more than the poorer community. Which is using less, but the, regardless of who has solar panels, but the infrastructure is a fixed cost.

It doesn’t fluctuate. And, and doing something like that, it, it fluctuates how much money’s coming in. So it’s like you don’t need all that money to maintain the grid, like, you know, you know what I mean? It’s like there, it’s a fixed cost to build the infrastructure and maintain it. So doing it based on usage creates, A weird situation where it’s like you may be paying way more to grid maintenance than is actually needed where somebody else may be paying less.

This is where, this is where this is so dicey. It’s like there isn’t a clear cut. This is the absolute correct way to do it. It’s, it’s one of those situations where it depends on where you are. Like Hawaii’s gonna do it, have to do it slightly differently than Massachusetts does it, and California’s doing it their own way.

And you could argue they’re doing it wrong, but it’s, it’s, every place is gonna have to figure out what the right mix is for them and their specific location based on the current penetration of residential solar. Right. But the, the argument is really about we should be incentivizing. Residential solar, we need more of it on the grid.

It can be beneficial for utility that embraces residential solar. Yeah. Instead of fighting it. And there are utilities that are doing that exact thing. That’s the part that kills me about this is that there are utilities like NL that recognize prosumers can be a viable great addition to the grids they manage.

Yeah. So why there’s other utilities that are just fighting it tooth and nail and spreading this information to scare people away from it. So it’s, it’s, it’s very frustrating when you see one group that’s doing their best to make it a thing and another group that’s actually trying to slow it down.

There were lots of comments on this video. Like I mentioned before, comments were all over the place regarding either being about the video itself or about the topic. Yeah. But they were generally positive, I would argue, which was a nice change. Cuz all too often there are these videos which are like, here’s how solar can benefit you.

And people come out with pitchforks. Yeah. But in this case, there were a lot of comments like this from Bert who said, I am always constantly amazed about how much corporations suddenly care about poor people when their bottom line is effective. And then from. New York Sunflower who wrote, I’ve always said that corporations would be more for solar energy if they could figure out a way to charge people for using the sun.

It looks like they finally have. And uh, finally, I like this one from Tamas Ba V’Las, who wrote Simple Rule in Life, if a corporation spends money to convince you to do something, Chances are you’ll want to do the exact opposite. Yeah. Tomas, you’re, you’re kinda,

oh, that’s awesome. So listeners, what do you think about all this? Please jump into the comments. There’s multiple avenues and how to come into this, but the one I’m most interested in seeing in the comments are, do any of you live in a place where you feel like you do have that equitable? Yeah. Process with the utility companies.

Are you seeing bills where you recognize why you are being charged a fee and that you feel like it’s been put in, in a way that is fair to you and fair to your neighbors and fair to people in your. Other communities around you who may have more or less than you, please let us know in the comments. As always, if you’d like to support the show, please do review us on YouTube, apple, Spotify, Google, wherever it was.

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