Alternative energy slowed by regulators’ stagnation
Wisconsin’s Public Service Commission faces two opportunities to accelerate competition, innovation and job growth in alternative energy.
Unfortunately, if the past is any indication, the regulators will punt.
As clean tech ascends, Wisconsin is falling further behind — held back by regulatory and legislative inaction, and utilities’ iron grip on their oldfashioned business models.
The issue before the regulators seems technical but shows the monopoly power that controls a fundamental part of our state’s economy.
Midwest Renewable Energy Association and Vote Solar in May asked the PSC to rule on a nagging issue: Is a group that provides third-party financing to a solar project considered a public utility?
Sounds wonky, doesn’t it? But the answer is critical to the state’s development of a clean technology economy.
A family’s quest for rooftop solar
Consider the Stevens Point family of four highlighted in Vote Solar’s petition. They want to install a solar rooftop system financed by North Wind Renewable Energy Cooperative. If they lived in Illinois, Iowa, Michigan or Minnesota — or 24 other states, according to DSIRE Insight — there’d be no problem.
But in Wisconsin, third-party-financed projects land in a legal gray area no one wants to touch.
The seminal case happened in 2018 when We Energies forced the city of Milwaukee and its partner, Eagle Point Solar, to retreat from plans to install rooftop solar panels on six downtown buildings. We Energies refused to connect the project to its grid, saying that because Eagle Point was running the project and getting an 80% ownership stake, it was acting like a public utility and therefore violating state law.
What the law really says is hotly debated. But We Energies generates about half the state’s electricity and distributes it across a wide geography. I don’t see how a company financing a solar project is acting like that. Maybe logic isn’t driving this fight.
Eagle Point appealed to the PSC, which refused to rule on the case, punting to the Legislature, which hasn’t resolved anything.
Eagle Point also sued We Energies and the PSC. It had won a similar case in Iowa — which is probably one of the reasons Iowa has, according to Solar Energy Insights, nearly 186 solar installations per 100,000 people compared with 122 in Wisconsin. The Wisconsin court dismissed Eagle Point’s lawsuit, punting to the PSC.
So third-party arrangements aren’t explicitly prohibited in Wisconsin, but lack of clarity and utilities’ combativeness have made developers withdraw.
No one taking charge of the issue
The PSC, Legislature and courts have been playing this game of hot potato for years — which means the utilities continue to win. My hunch is the phalanx of more than 30 utility-funded lobbyists crawling around the Capitol probably helps.
At least so far it’s not like Illinois, where ComEd agreed to pay $200 million in fines for bribing associates of former House Speaker Mike Madigan, who now has been indicted on 22 counts by a federal grand jury. Or Ohio, where NextEnergy paid a $230 million penalty related to a bribery scandal involving Ohio’s former speaker of the House and top utility regulator.
These are desperate times for utilities, I guess.
In We Energies’ letter denying Milwaukee’s solar project, the utility offered an alternative: Its Solar Now program, which the PSC hadn’t even approved. You know there’s monopoly power involved when the utility sends your project denial and a sales pitch for its not-yet-approved product in the same letter.
The problem is clear. While the solar system would lower the Stevens Point family’s energy costs, it would also lower their demand for premium-rate electricity from the grid — an affront to the utility’s business model.
“The energy companies want solar power, but they don’t want individuals to have solar power. And we allow our utilities to do this to us?” says Roger Sands, an Elm Grove accountant and energy efficiency advocate. “Obviously, solar power created at the site of usage is more efficient and safer for the homeowner in case of an outage than shipped solar power.”
Solar panels produce direct current, which doesn’t travel as well as the alternating current traditional utility plants generate.
Solar at odds with outdated system
The problem with allowing traditional utilities to have monopoly control over solar generation is that their centrally distributed model is antiquated, polluting and increasingly expensive. Yet they defend it viciously.
I suppose many of us would do the same if, like We Energies, we had a PSCapproved, guaranteed 10% profit. Or in the case of certain of its natural gas and coal plants, 12.7%.
“In Wisconsin, the fight against customer efficiency and solar is really a fight to build things and capture us into paying for them in the future,” says Nick Hylla, executive director of Midwest Renewable Energy Association (MREA), one of the PSC petitioners.
“If we pay We Energies full value plus interest for plants they overbuild and let them restrict customer ability to reduce energy use, then we have expensive energy and trapped customers.”
In fact, Wisconsin has the secondhighest electricity prices in the Midwest and the 13th highest in the country, according to Statistica’s 2021 data.
But back to third-party financing. Should utilities, just because they have more money, be the only ones who can build solar systems? That’s like saying rich people are the only ones who can buy houses or cars. It’s un-American.
Sen. Robert Cowles (R-Green Bay) and state Rep. Rachael Cabral-Guevara (R-Appleton) co-sponsored legislation in the last session that would make third-party solar ownership legal and mandate utilities connect these projects to the grid. Hopefully, they’ll be back with it in January.
Every state contiguous to Wisconsin requires its utilities to file 10-year plans with regulators. Not Wisconsin. Our PSC operates blind, on a case-by-case basis.
The PSC is supposed to protect ratepayers. One way to do that is to promote innovations and improvements to the power grid, not protect the status quo.
Maybe it’s time to revamp the PSC. Require that it develop a long-term energy plan for the state and prevent local utilities from running the show to protect their outmoded infrastructure.
Kathleen Gallagher was a business reporter at the Milwaukee Journal Sentinel and the Milwaukee Sentinel for 23 years. She was one of two reporters on the team that won a 2011 Pulitzer Prize for the One in a Billion series. Gallagher is now executive director of 5 Lakes Institute, a nonprofit working to grow the Great Lakes region’s high technology entrepreneurial economy and culture. She can be reached at Kathleen@5lakesinstitute.org.