From our upcoming October issue, among 23 articles, columns, letters
I. “Rethinking Rationale for Net Metering,” By Barbara Alexander, Ashley Brown, and Ahmad Faruqui
Solar customers are a distinct class of residential customers that should be treated separately from other non-solar residential customers. They will have an obligation to pay their fair share.
This will mean that their payments for the electricity they are selling back to the grid under net metering should reflect the market price for their generation supply service. These should not be arbitrarily-determined high prices, and certainly not the full retail rate.
There are a variety of ways to ensure that solar customers pay their fair share of the costs of both back up generation capacity and the grid, and don’t end up being overly subsidized by non-solar customers. However, the fundamental policy should require solar customers to pay their share of the common costs.
These costs are necessary to support and maintain the distribution or delivery systems and to ensure that adequate capacity is available when needed for all customers.
This payment can be structured as a higher fixed charge, a demand charge, or a combination of both. It will pay for the cost of being connected to the grid, along with a time-of-use rate for the energy consumed…
The compensation for excess generation by solar customers could vary by time-of-day. These costs are higher than average during the afternoon and evening hours, and lower than average during nighttime hours.
II. “Leadership Lyceum Podcast Summary,” Tom Fanning, Southern Co. CEO, with interviewer Tom Linquist
“We have the quality of regulation. We are an integrated, regulated utility in the southeast, and therefore I think it is a much more constructive business model on behalf of the customers and us. That is why we are the only company in America that is all of the above. We can, in fact, plan an optimal portfolio.
If you are in a so-called organized market, you don't have that ability. We have scale, financial integrity, technical depth, regulatory regimes that are supportive to be able to do these things.
Now, what are the constraints? Our financial capacity is pretty large. The constraints themselves are not very big, because we are so big. We can make lots of bets. We've done these [acquisitions], and maintained a posture of a financial integrity that is fantastic.
In fact, if you look in the market, I think the past two years, Southern Company has had, I think among the S&P 500, the lowest beta, the lowest systematic risk measure of any stock in the S&P 500, and that is because investors believe we can execute our business in a highly-sustainable, predictable way ...
This notion of financial constraints, while I suppose there is a theoretical limit, I don't see it right now. We can do everything we want to do.
One of the tenets of chaos theory says that the variance in nature is typically bigger than what you quantitatively measure, and I kind of believe that. When you think about all of the change in front of us, I think the way to play that change is not to make enormous static bets, determinate bets, but rather make bets that are either options within themselves or reasonably-sized bets.
The AGL acquisition creates other options. And that is the way we are pursuing it.
The greater the volatility, the greater the uncertainty, the greater the value your options have. That is just straight finance theory, and that is the way we are playing it.”
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Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com
