Nevada killing solar?

I must admit to a kneejerk reaction to this op-ed in today’s New York Times. The writer, Jaccques Leslie, accused Nevada’s utility regulators of trying to scuttle the burgeoning solar industry in that sun-drenched state.

In late December, the state’s Public Utilities Commission, which regulates Nevada’s energy market, announced a rate change drastic enough to kill Nevada’s booming rooftop solar market and drive providers out of the state. Effective Jan. 1, the new tariffs will gradually increase until they triple monthly fees that solar users pay to use the electric grid and cut by three-quarters users’ reimbursements for feeding electricity into it.

Does that make you angry? What about the further accusation that nefarious politics was behind the deed? Blood boiling?

Well, what’s really going on? As it happens, Nevada Energy, the huge investor-owned distribution utility, sought to increase its basic service charge to recover fixed costs imposed on all users of its electric grid. The state’s PUC approved the increases. The changes will impact residential solar customers more than those who have not installed panels, since the fixed charges represent a larger portion of the retail bill than the variable energy component. While the increasing service charge will deter some customers who would have otherwise installed solar panels, I doubt that the increases will destroy Nevada’s solar industry.

We customers of the Snohomish County PUD do not (yet) pay a service charge. The entire bill is based on multiplying two factors: a unit rate and total units (kilowatt-hours) consumed. Those who use more electricity contribute more to paying the fixed costs of the utility (e.g., salaries and equipment). Those who use less, including customers who have installed solar panels on their roofs, pay less toward those fixed costs.

Almost since I’ve been on the PUD Board of Commissioners I have advocated unbundling rates. I have long believed that fixed costs should be recovered through fixed fees (e.g., a basic service charge) and that the energy portion of our bills vary according to our consumption of electricity. The bill, then, would be divided, with both a fixed and variable component.

Let’s make a hypothetical case. Suppose that a PUD customer consumes 1,000 kilowatt-hours in a month. Suppose further that the energy rate is 10 cents/kWh. Under the current structure the customer pays $100. That takes care of the electricity and the fixed distribution charges (all non-energy costs). As it happens, the fixed costs for the residential sector are about half of the total. The variable energy portion making up the other half.

Now we’ll imagine the PUD’s establishing a basic service charge to recover those fixed costs. The PUD would then lower the variable energy component to reflect the new basic charge.

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The total bill would not change for this customer, should rates be unbundled.

But suppose that you are a solar customer. You’ve installed panels on your roof, for which you have received a rebate from the PUD to pay for some of the costs. Today, under bundled rates, your bill drops after the installation, because you are now generating some of your own electricity and you don’t need to buy as many electrons from the utility. Again, you are not being charged a fixed fee for the non-energy costs you are really incurring. Yet, the PUD still needs to read your meter, pay for the trucks it uses, and the paychecks of its employees.

Now suppose that more and more customers decide to install solar panels. Those fixed costs do not go away. But the PUD is recovering fewer dollars, since electricity purchased from the grid declines, replaced with solar energy.

The PUD still has to pay its bills. It has two choices: raise everyone’s bundled rate; or establish a fixed charge to recover some or all of the fixed costs.

In Nevada’s case, where the sun shines more often than not, the aggregate reduction in electricity consumption was impacting the utilities’ bottom line. Nevada Energy elected to raise its basic service charge, while, at the same time, lowering its variable energy charge. The regulatory commission approved the request. (You can see for yourself here.)

I, for one, do not want the PUD to get in the way of customers’ desire to generate their own power. Indeed, the PUD encourages the installation of solar panels through its rebate program. Over time, however, as more customers switch to solar, the PUD will have to adjust. Again, I support unbundling the rate, instituting a fixed charge and a lower energy rate. In so doing, the utility recovers its costs and becomes economically indifferent to solar customers.

Also, the same logic applies to conservation. Those customers who take advantage of the PUD’s programs or do so on their own, lower their energy bills. But those fixed utility costs remain. A basic service charge, combined with a lower energy rate, would more accurately reflect the utility’s cost structure.

The smoke of whistleblowing

Aided and abetted by the Everett Herald‘s thirst for sensation, a PUD employee alleged crimes and misdemeanors against current and former employees of the utility. The whistleblower cast a wide net, seeking to also entrap state government officials and private firms. Despite the headlines and smoke, investigators have detected no fires, exonerating the PUD and the Department of Commerce of wrongdoing, save for an extremely minor infraction of a utility directive (“appearance of conflict”).

Lost in the smoke and headlines is a very remarkable story, some really good news. I’m talking about energy storage technology, what I’ve called “the holy grail” of distribution utilities in search of a post-carbon future.

We at the PUD take climate change seriously. How could we not, given the overwhelming evidence of global warming and its effects? Fortunately, over 80 percent of the electricity PUD customers consume is in the form of hydroelectric power, a non-polluting, renewable resource.

Although the PUD had committed to acquiring all cost-effective conservation and securing only green energy to fill the utility’s supply portfolio before voters approved Initiative 937, which mandated such strategy for the state’s larger utilities, PUD staff and commission realized the challenge of relying on intermittent resources. After all, the sun doesn’t always shine and the wind often blows when the utility needs it least.

What to do? How could the PUD more effectively use wind, solar, and hydro resources to meed the electricity needs of its customers? The answer, utility officials believe, lies in energy storage. The trick is to store the output of intermittent generation then release it into the grid when needed.

After investigating pumped-hydro storage possibilities and other options (e.g., compressed air), the PUD determined that a more promising and least costly alternative existed in the form of batteries. Batteries, of course, are plentiful, so the technology is mature and widespread. However, no one had seriously explored using batteries on a utility-sized scale.

As it happened, the PUD’s then-general manager, Steve Klein, an electrical engineer in his own right, shared a passion for new technology with David Kaplan, a computer scientist with degrees from Berkeley and Stanford. Kaplan had already researched potential uses of battery storage. Why not electric utilities?

But Kaplan lacked the working knowledge of electric grids. How would batteries fit into the day-to-day, even second-to-second, operations of electricity distribution?

Kaplan, Klein, and others recognized two challenges. The first was to develop the necessary software to automate the storage and discharge of electricity using batteries. The second was to establish industry-wide standards to augment plug-and-play components.

Klein, after numerous conversations with Kaplan, imagined a win-win proposition: hire Kaplan to consult with the utility on its needs-improvement technology architecture, for which Kaplan was extremely qualified. While at the PUD, Kaplan would also gain that working knowledge of electric grids and how batteries could be incorporated. Meanwhile, Kaplan developed algorithms, the necessary automation software.

The cooperative efforts yielded MESA, the Modular Energy Storage Architecture standards. As of this writing, over 20 entities, including the nation’s largest electric utility, Duke Energy, have joined (see chart below). The PUD has already installed large batteries at substations. Kaplan’s software provides the crucial control interface. Vendors of component products (e.g., Alstom and Parker) are working with other utilities in Puget Sound and across the country.

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Perhaps the most significant entrant to battery storage technology is Tesla. The company has developed both utility-sized and home-sized battery solutions, Powerpack and Powerwall, respectively. Tesla has driven the cost of batteries down, down, and down. Here’s a slide from a recent presentation to the PUD board of commissioners on battery costs:

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Those of us in the utility business (I’m a PUD board member) are understandably excited about battery storage. It should not surprise anyone that it has become the magnet attracting energy nerds from all over. Puget Sound, in particular the PUD, begins as ground zero. Governor Inslee is excited about the technology, and so are many members of the state legislature. It’s understandable that green-energy aficionados share a passion and commitment to pursuing “the holy grail.”

I think it terribly unfortunate that this good-news story has been overshadowed by spurious allegations that have been magnified by a scandal-mongering press. Reputations have been besmirched, without cause or justification.

Perhaps one day the local paper of record will find a way to expose the PUD’s battery-storage initiative—in a good way. The utility and its employees deserve as much.

“Obviously unfounded and frivolous” [u]

Thus spoke the Executive Ethics Board in concluding that current and former employees of the state’s Department of Commerce did not violate any laws or conduct rules relating to energy-storage technology and associated grants, including those to the Snohomish County PUD. The Seattle Times published the findings. Conspicuously absent was any mention by the Everett Herald, which has been running a sensation-mongering series of allegations against the PUD and its recently retired general manager.

In June of last year the Herald ran this story—as I recall, above the fold on the front page. It was co-written by Dan Catchpole and Jerry Cornfield. The headline read:

Complaints say that commerce officials helped PUD score a grant

So, why did the Herald‘s publisher and editors decline to report the exonerations? There is still time, of course. I’m waiting, but not with bated breath.


UPDATE (Jan. 27, 2016):

More than a week after the story was published in the Seattle Times and other outlets, the Herald finally shares with its readers the news that there was no basis for the “anonymous” allegations made against current and former Department of Commerce employees. They had been implicated by persons unknown in an alleged conspiracy to siphon Clean Energy funds in the direction of 1Energy via the Snohomish County PUD.

I was struck by the irony of the Herald piece. Here’s the relevant quote:

“There is still a great perception out in the public that you have executive branch people going from job to job, grant to grant and the money follows them,” said Sen. Doug Ericksen, R-Ferndale, who is chairman of the Senate Energy, Environment and Telecommunications Committee.

First of all, Senator Ericksen could hardly know how “the public” perceives the issue he describes, that people are “going from job to job, grant to grant and the money follows them.” Moreover, that notion was soundly debunked by the Ethics Commission investigating the allegations.

Now for the ironic part. The “perception,” such as it is, was fueled by the Herald itself, beginning with its initial sensationalist story on the spurious charges leveled by a PUD employee against his superiors and 1Energy employees. That, in turn, led to the Herald‘s editors lionizing the whistleblower. The scandal-mongering was continuously churned by the newspaper in subsequent reports, including this one on the Ethics Commission investigation.

Reap what you sow [u]

Many years ago the good citizens of Snohomish County decided that it would be a good idea to elect just about everyone to government positions, though I think the dogcatcher is still appointed. On a typical local ballot, there are the usual suspects for state and federal offices. But then near the bottom is a lengthy list of local candidates, people you know nothing about and, frankly, probably don’t care to know. We vote for multiple county officials, including the assessor, the clerk, the sheriff, the executive, the council members, and so on.

Three years ago I was asked to write an op-ed for the Everett Herald. In so many words, I suggested that more local governments be structured and operated like a public utility district, with just three elected board members, who appoint a chief executive officer. I argued that PUD governance was lean and accountable; if citizens (ratepayers) believed that the utility was moving in the wrong direction, throw the bum(s) out.

In that essay I singled out Snohomish County government as the antithesis of PUDs. I wrote:

…Let’s go through the list: county executive, five county council members, the treasurer, the auditor, the court clerk, the sheriff, the assessor, and, finally, the prosecutor. Then there are the judges. Who is accountable to whom?

To be sure, each of these elected officials answers to the voters. But none is accountable to the other. Worse, in my judgment, the council has its staff of aides and policy analysts as does the executive, creating two parallel support teams. That’s got to be expensive, if not also unwieldy.

Then there are the council committees. On Mondays there are an “administrative” committee session, an “operations” committee session, and a “law & justice/human services” committee session. On Tuesdays there are three more sessions, involving the “finance and development committee,” the “planning and community development” committee, and finally, the “public works” committee. The “general legislative” session occurs on Wednesdays. Each of these sessions is chaired by one of the five council members. Also present are separate legislative analysts and the council’s clerk. So un-PUD-like.

Well, with so many elective offices, none accountable to the other, we would expect disagreements and, on occasion, such disagreements can really muck things up. As I write, the county council and the independently elected executive may not be able to reach consensus on a new budget. According to the Herald:

Failing to act could earn the county a dubious distinction as the first in Washington to suffer a government shutdown because elected leaders couldn’t agree on a budget.

Yesterday, following months of public briefings and open hearings, the Snohomish County PUD board adopted next year’s budget. No headlines. Just business as usual.


UPDATE 12/17/2014):

Crisis averted. Budget passed.

Limited posting

I had hoped to get back to blogging after the election. (As it happens, I retained my contested seat.) However, last weekend my slicing machine mistook my little finger for a cucumber, so my newly bandaged pinky interferes with typing.



And speaking of elections…

You may find some shining examples of public servants here and there; overall, however, the people who have decision-making power at the local level in this country are not terribly bright. And for the most part we have absolutely no idea what they are doing.

That’s from’s Ed.

I like to think that I’m a bit smarter than the average bear and don’t fit the above description. The voters barely agreed, as I won with a much smaller margin than my two previous victories.

And if people “have absolutely no idea what [local elected officials] are doing,” it’s likely the result of just not paying attention. Most public institutions, including the one with which I’m associated, post volumes of information on their respective websites, from minutes to budgets and everything in between.

That said, our local newspaper is conspicuously absent from the political entity I help govern. Journalistic cutbacks yielding a dearth of reporters.

I am not a scientist [u]

“I am not a scientist,” is the consistent refrain from Republican officials, a not-so-clever rejoinder to mountains of amassed data and analysis demonstrating that greenhouse gases are on the rise along with global temperatures, inching the planet closer to one catastrophe after another. Indeed, it has become the litmus test for GOP hopefuls and standard bearers: deny climate change, or else.

So, what are American voters poised to accomplish today? Increase the Republican hold on the House and return the Senate to the Grand Old Party. The rather simple calculus: too many voters are either ignorant or don’t give a damn about their offspring’s future.

Closer to home, the Snohomish County PUD faces numerous obstacles to being green, from narrow minded “environmentalists” to officious bean counters in Washington, D.C. By all means address climate change, come the faux environmentalists, but please, please don’t do this or that project, however benign and renewable. The federal bean counters don their green shades equipped with solid blinders to withhold funds from initiatives previously encouraged with enthusiasm and dollars.

Delivering episodic reports of doom and gloom, the International Panel on Climate Change (IPCC) charts the befouling of air and water:

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Fibure 1.6 from fifth IPCC synthesis report

Yet, the panelists opine (pdf), there is still hope of averting the worst, though time is rapidly running out and mitigation costs jump higher with further delays.

Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems. Limiting climate change would require substantial and sustained reductions in greenhouse gas emissions which, together with adaptation, can limit climate change risks.

The favored response to this warning: “I am not a scientist.” The far more accurate and fitting utterance: “I am an idiot.”

UPDATE (Nov. 5, 2014):

This chart from the New York Times speaks volume:

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Embarrassing [u]

If you’ve wandered over to these pages seeking an explanation for what happened to my campaign website, I sheepishly report that I inadvertently let my domain registry expire. I was notified of the impending expiration, but the notices were sent to a now-cancelled email account, which had been hacked twice previously.

I have now renewed the subscription, but am told that the website ( will not be back until tomorrow.

Lousy timing, I’d say.

UPDATE (Oct. 30, 2014):

Back up and running.

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