Consider this: the government grants a private corporation a monopoly to provide an essential service—electricity—that everybody needs, and no one can do without. Unchecked by competition, this corporation is able to generate profits with a guaranteed rate of return from ratepayers who have historically had no meaningful choice. The corporation then takes a small portion of those profits—say, a million dollars or so—and donates it to some elected officials. Those same elected officials then act to head off genuine competition and perpetuate the monopoly. And the cycle repeats.
Unfortunately, this is exactly what is happening today in parts of the electric utility industry. In November and December, the Consumer Financial Protection Bureau and Federal Trade Commission received nearly identical letters expressing concern that companies in the solar industry might be using “misleading sales techniques” to attract customers. The lead signatory on each letter was an elected representative from Arizona, where the for-profit utility Arizona Public Service (APS) has waged a multi-year campaign against the distributed solar industry. Last Friday, the Arizona Center for Investigative Reporting revealed what everyone in the solar industry already knew about those letters—they came from APS. And by that I mean, an APS employee literally wrote the original draft of the letter to the FTC, as confirmed by the chief of staff for one of the lead signatories. What’s more, the twelve elected officials who signed the letters each received substantial donations from utility and fossil fuel interests during the last session of Congress. The lead signatory’s number one donor is none other than Pinnacle West, the parent company of APS.
These tactics are not surprising given what’s at stake. Electricity generation in the United States is a $372 billion market, and utility companies have enjoyed nearly 100% market share for most of a century. What’s changed is that in a growing number of states, it’s now cheaper for millions of homeowners to pay for solar electricity than to buy electricity from their utility. Hundreds of thousands are already choosing to do so, and many more will surely follow. This choice is not only better for our environment; it also drives enormous economic impact. Last year alone, the solar industry created one out of every 78 new jobs in America, and SolarCity created more than 4,000 of those jobs.
While some utilities are doing the right thing and using the advent of cheap solar power to update their business models, a handful of utilities are using every tool at their disposal to curb this growth, from predicting their own “death spiral” to scare regulators and the public to leveraging the relationships they have forged with regulators and elected officials to try to undermine competition. Fossil interests also appear to be funding allied media outlets to parrot their messages. It was no coincidence that one of the first articles that appeared on the Congressional letters was penned by Watchdog.org, a publication that is funded by the Koch Brothers.
As for the speculations about “misleading sales techniques,” even APS’s letter doesn’t actually identify any. The reality is that rooftop solar providers give customers a greater level of transparency into future pricing than any utility in America. Many utilities will not tell their customers what they are going to pay for electricity next year, while SolarCity tells customers exactly what they will pay for solar electricity, to the penny, every single month, for the next 20 years. We publish our contracts online for anyone to review, we insure our systems and guarantee their performance and we provide repair services. SolarCity has an A+ rating with the Better Business Bureau, the highest rating the agency provides, with complaints registered from less than one tenth of one percent (0.1%) of customers. Meanwhile, more than 38,000 of our customers have referred at least one other customer to SolarCity. To be clear, our business depends on positive word of mouth, and meeting customer expectations is the foundation of our growth. While no industry with hundreds of thousands of customers has a 100% satisfaction rate, rooftop solar would not be creating more than 1.5% of all new U.S. jobs if it were legitimately misleading customers. Americans want choice in just about everything these days—and they love saving money—and they’re asking for more of both from electricity providers.
Corporate political donations are an intractable part of government, and they are not unique to any category of energy. However if the future of solar energy depends on which side can give more money to government officials, then the utilities will likely win because they have much larger coffers and a decades-long head start. Still, poll after poll has demonstrated the public’s overwhelming support for solar energy. Ultimately, we believe the future of solar in this country should be decided by the American consumer.
The largest subsidy that a government can convey upon an industry is monopoly protection from competition. Utilities are among the last monopolies left in America, and, not surprisingly, they do not intend to surrender that status quietly. Some utilities will adjust and prosper in the new energy future, taking their cues from competitive forces and consumer preferences, and not regulatory statues written in the last century. Other utilities, like APS, may continue to use some of the profits generated by their monopoly status to suppress competition and support campaigns of politicians aimed at protecting the status quo. The latter approach does not serve the public interest, nor will it ultimately serve the utility industry as a whole. If a handful of bad actors are seen to be blocking customers’ paths to cleaner, more affordable energy, it could erode the public’s trust in utilities, and hurt even those that are open to finding a path forward that benefits everyone.
We call this phenomenon “Monopoly Money”, and we will use this space to report on everything we see and hear about it. Stay tuned.