The following commentary was written by Emily Piontek. Piontek is a grassroots organizer with Appalachian Voices and a 2021 Clean Energy Leadership Fellow. She works to foster energy democracy at Virginia’s electric utilities through legislative and regulatory engagement and public outreach and education. See our commentary guidelines for more information.
For the second consecutive year, Virginia-based Shenandoah Valley Electric Cooperative is seeking regulatory approval of an increase to residential fixed charges from $25 to $30 monthly, up from roughly $13 per month before 2020. If approved by the Virginia utility regulatory body, the State Corporation Commission, the cooperative’s fixed charge would triple that of neighboring utilities, becoming the highest in Virginia.
Recognizing that the case initiated by their co-op could substantially impact monthly electricity bills, members (customers) sought advice from the advocacy community. Utility regulation shapes the modern grid in fundamental ways, but it can be prohibitively technical, expensive and time consuming for non-utility participants to engage in regulatory proceedings. Concerned members of Shenandoah Valley Electric scrambled to cover the cost of retaining a ratemaking expert to represent them before the Commission.
Average consumers interact with their utility just 8 minutes yearly. Most aren’t following electric bill line items like fixed charges, which cover utility costs of providing door-to-door service and don’t vary based on household energy usage. They appear on residential bills in addition to other charges, including those that are based on household electricity consumption. In contrast to fixed charges, per-kilowatt hour charges can theoretically be controlled by customers through adjustments to energy consumption behavior or through using efficient appliances.
And that’s why increases to fixed charges matter. Customers struggling with unaffordable bills are vulnerable to increases in charges they can’t adjust their energy consumption to address. Net-metering customers find their investments in solar energy make less economic sense because high fixed charges absorb expected energy savings, and disincentivize investment in what is essentially a home-scaled, clean-power plant.
At Shenandoah Valley Electric, higher fixed charges could comprise one-third of customers’ annual bills, yet nearly 20% of the cooperative’s base is low-income while another subset contributes over 5 MW of solar power to the utility through residential net-metering. Neither customer type has the time, expertise or tens of thousands of dollars required to intervene in a regulatory process that has significant financial implications. Both stand to lose.
Meanwhile, electric utilities (including Shenandoah Valley Electric) retain entire legal teams and ratemaking experts for the very purpose of defending their interests (read: their investments in utility scale power plants) to state regulators.
A forum to foster a cleaner energy system
But utilities are also using the regulatory arena as a forum to ask regulators for approval to involve customers in programs that would help them meet state-mandated clean energy targets. Demand-side management programs (to use utility-speak) transition electric customers into roles where they both consume and produce electricity, thereby contributing multiple benefits to the grid including reliability and responsiveness. Demand-side programs permit utilities to control customers’ thermostats and water heaters in exchange for special rates or rebates, or incentivize residential solar and storage.
Modern electric customers should be valued both for what they contribute to and take from the grid. Where consumers are hosting solar and storage power plants at their homes and participating in utility-owned energy savings programs, they must also be represented in regulatory proceedings — traditional electricity generators and providers (utilities) already are. Given the constraints faced by consumers, we must foster regulatory intervention on their behalf at state utility commissions like the Virginia SCC.
Supporting nontraditional players in the regulatory arena
The grid is becoming increasingly decentralized as more distributed energy resources like residential solar are incorporated and utilities are responding to state clean energy standards (or a federal incentive via the proposed Clean Electricity Payment Program). The system is changing rapidly — giving customers more reason to intervene in regulatory proceedings.
Consumers could be supported via innovative intervenor compensation programs modeled by California and Oregon, popularized by energy expert Dr. Leah Stokes and envisioned in the Office of Public Participation docket at the Federal Energy Regulatory Commission. California’s program compensates qualifying intervenors for participating in utility regulatory cases, and is funded by small charges to investor-owned utilities’ customers. The Intervenor Compensation Program costs about $12 million a year, but saved customers more than $350 million in 2013 alone.
Consumer protection advocate Eric Borden of the Utility Reform Network is an enthusiast for intervenor compensation: it “gives consumers a shot” in an arena where they are otherwise out-resourced. To qualify, applicants need only prove they made a “substantial contribution” to a regulatory proceeding. Although it can take years to receive compensation, a difficulty for less well-funded groups, Borden calls the burden “manageable” for many (including his).
The Oregon Public Utility Commission also offers an intervenor funding program for groups that represent “broad customer interests.” In 2020, HB 4067 was introduced following the success of a 2018 intervenor fund pilot; it would have expanded the PUC’s program to better support environmental justice and low-income groups but never cleared the Senate. However, regulators are interested in improvements to accommodate “all impacted stakeholders.”
Intervenor compensation programs ensure the public is represented in an avenue that’s not partisan or political, unlike Offices of the Attorney General, the usual voices of consumer advocacy. From a procedural justice perspective, intervenor compensation is a good governance initiative because it improves the ability of affected parties to participate in decision-making. As the clean energy transition accelerates, states should consider the role such programs could play in ensuring fairness and equity in the grid of the future. It’s already too late for the members of Shenandoah Valley Electric.