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Energy Freedom and the Threat to Utilities

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With a white-knuckled grip, the old guard of energy producers, primarily the investor-owned utilities and the handful of companies that they do business with, are holding on to a business model that is outdated by its own fuel source and inching closer every day to resembling the bygone era of Ma Bell and regulated natural monopolies.

Year after year, the investor-owned utilities are successfully convincing our decision makers that it is in the best interest of Floridians to apply the old, state-regulated business model to a new technology and a new way of creating electricity. In economic parlance they are attempting to transition from a regulated, natural monopoly, where infrastructure and economies of scale give them the natural advantage, to a coercive monopoly, where their power is granted to them and protected by government intervention.

They know the clock is ticking, though, and they know that renewable energy technology is evolving so rapidly that policy and regulation will inevitably evolve right along with it. In this new era of energy production and self reliance, you still won’t be able to build an oil refinery or a coal-fired plant on the roof of a Publix, but it is a perfect home for a 350KW solar array.

And it is in this modern era of production, as utility companies watch their demand drop and the price of grid parity (the price at which renewable energy becomes cheaper than current fuel sources) loom menacingly just a few short years down the road, that the regulated monopolies are pulling out all the stops to extend their monopoly all the way to the sun if we would let them.

As competition from the trucking industry broke the natural monopoly of railroads in the 1930s, so will renewable energy deliver a similar fate to investor-owned utility companies. When you throw politics and economic efficiency into the mix, making the transition away from the outdated model of energy production is no longer a question of if, but when.

Americans everywhere have embraced free-market forces and competition as a principle that cuts across all party and ideology lines. Competition, innovation and ingenuity have been the hallmarks of transition and growth for America through every economic adversity our country has ever seen.

So far, though, when applied to the production of energy in Florida, these principles lose ground quickly. And starting right now, it is time for the people of Florida to take back control of how they are buying electricity and who they are buying it from.

Small competitors are routinely blocked from any legislation that would allow them to sell electricity to a customer or to the grid under the paper-thin argument of a utility’s “obligation to serve,” basically saying that independent power producers couldn’t be relied upon to produce electricity and that they weren’t players in the overall scheme of energy production.

As an industry we may be encouraged by this claim as the last line of defense, because we need not look far to find clear and overwhelming evidence to the contrary. In New Jersey, for example, there are more than 8,900 solar systems producing more than 300MW of electricity and providing it to the grid and to others. In addition to implementing a targeted amount of renewable energy production, New Jersey has also embraced the key distinction that, although the utilities do in fact have an obligation to serve, the customers don’t have any such obligation to be served.

In a free and competitive market, individuals and businesses can choose who they buy clean, renewable energy from, and they can even choose to construct their own facilities and sell some or all of their power to a consumer. The shopping center in Gainesville could sell to its tenants, a farm in Bartow could sell to its rural neighbors, and a wind facility in Okeechobee could provide energy for themselves and the local community, all without the government stepping in, gumming things up and labeling them a regulated utility company.

What the industry needs right now is for the government to just get out of the way and let the free market develop renewable energy in Florida.

(re-print of original article from March 2011)

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