Many Florida voters are about to get tricked.
There’s an initiative on the state ballot this year called Amendment 1. Read casually, it appears to be pro-solar. In fact, it would lock innovative solar companies out of state markets and lead to higher rates and fees for households and businesses that choose to go solar. It would effectively crush the nascent rooftop solar market in the state.
The majority of Florida voters love rooftop solar. They have said so repeatedly in polls and surveys. But Amendment 1 uses deliberately deceptive language to try to trick solar supporters into doing the opposite of what they want. It’s brazen as hell, a bait-and-switch pulled off right out in the open, and it looks like it might work.
Amendment 1, explained
Amendment 1 would do three things, one silly and two malign.
First, it would inscribe in the state constitution the right to own or lease solar panels for personal use. Which is ... fine? Except customers already have that right, by Florida law. They also have the right to own a toaster or lease a car, no toaster- or car-specific constitutional amendments needed. This provision exists solely to give voters the impression that they’re supporting rooftop solar.
Second, though it doesn’t say so in the ballot language, it would preserve the total monopoly that investor-owned utilities currently have on rooftop solar in the state, locking out private competitors. (As we shall see later, an alternative initiative would have done away with the utility monopoly, but it didn’t make the ballot.)
Third and most deviously, it would create "constitutional protection for any state or local law ensuring that residents who do not produce solar energy can abstain from subsidizing its production." What this means in English is that utilities will have a constitutional basis to challenge any policy that they think unfairly favors solar power.
Utilities do not want competitors
Let’s try to situate the Florida fight in a broader context.
For more than a century, the action in the electricity sector has been on the utility side: power plants, transformers, transmission lines, distribution systems, and other big infrastructure. Customers were passive consumers, fixed units of demand that utilities had to serve.
Lately, however, there has been an explosion of activity in distributed energy, the kind of energy technology that works "behind the meter," i.e., on the customer side of things.
Most notably, rooftop solar has taken off, as the price of panels has dropped by more than 80 percent since Obama took office.
It’s not just solar panels, though. As the Tesla/SolarCity merger has suggested, it’s also solar roofs and windows, batteries, smart appliances, and electric vehicles — a whole ecosystem of customer-side energy products and services, tied together by increasingly sophisticated energy management software.
Households and businesses are increasingly able to generate, store, manage, and economize their own electricity. And to the extent that they do so, they become competitors to utilities. Tiny competitors, comparatively, but a swarm of tiny competitors can do real damage.
Utilities do not want competitors. They like their monopolies very much, thank you. And they will do anything to protect them.
Florida’s utilities are notorious
In the beginning, US utilities were granted complete monopoly over every part of the electricity system — generation, transmission, and distribution to customers. That worked fine for most of a century, as electricity access spread across the country.
But utilities got bloated and wasteful. So in the 1990s and early 2000s there was a wave of "deregulation." Some states broke off electricity generation into private wholesale-power markets. Some states also permitted competition at the retail level, allowing customers to buy power from third-party providers.
Florida was having none of that.
Florida utilities remain old-school, soup-to-nuts monopolies, and they are legendary for defending their prerogatives. In a superb story for Rolling Stone, Tim Dickinson sums up utility influence in the state:
The utilities are top political donors in Florida. Since 2004, the state's four largest [investor-owned utilities] contributed at least $18 million to state politicians and political committees – a preponderance to Republicans, who now control state government. In addition, since 2007, the companies spent at least $12 million on lobbying, employing an average of one lobbyist for every two legislators in Tallahassee. "They've got a pretty good harness on the whole deal up there," says [ex-governor Charlie] Crist.
The utilities have a "pretty good harness" on the state’s public service commission (PSC) as well. It is supposed to watchdog utilities; instead, it recently gave them the green light to gut their energy efficiency and solar rebate programs.
Florida’s utilities are grudgingly building some big solar power plants, but they want nothing to do with distributed energy. The state ranks third in the nation in potential for rooftop solar but 14th in installed capacity.
Third-party companies offer power purchase agreements (PPAs), solar leasing, and other financing mechanisms that have helped reduce the upfront costs of distributed solar and spur the market in other states. Without those tools, in Florida, only wealthy customers who can afford the full upfront cost of panels have them.
A grassroots effort to introduce competition in Florida was stamped out by utilities
With the legislature captured by utilities, the only way to loosen their grip on solar is through direct democracy at the ballot box.
So last year, a coalition led by the Southern Alliance for Clean Energy (SACE) attempted to get a "Solar Choice" initiative on the ballot, which would have amended the state constitution to end the utilities’ monopoly on retail electricity sales. It would allow third-party competitors to offer PPAs, solar leasing, and all the other tools that have expanded the rooftop solar markets in other states.
The coalition included both environmental and conservative "green tea" groups, which sensibly objected to state-sponsored monopolies preventing private market competition.
The coalition set about trying to gather the almost 700,000 signatures needed to get on the Florida ballot — an extremely expensive proposition in the best of circumstances.
With the Solar Choice measure polling at 70 percent, utilities freaked out. Then, like the Grinch who stole Christmas, they had a wonderful, awful idea.
Rather than oppose the Solar Choice measure, they created a fake grassroots group (Consumers for Smart Solar, which is entirely funded by utilities and right-wing advocacy groups) and started pushing their own ballot measure. Using the happy language of "rights" and "choice," the "Smart Solar" initiative would lock in the utility death grip on distributed solar.
Consumers for Smart Solar set about burying the Solar Choice effort under a tide of utility money. Dickinson relates what happened:
In the end, the utilities crushed the Solar Choice campaign by spending it into submission. ...
By mounting a competing measure, the utilities sparked a financial arms race – with the utility-backed measure typically paying gatherers twice as much per signature. "When we were paying a dollar on the street, they were paying $2," says [SACE head Stephen] Smith. "When we were paying $2, they went to $4." Soon, the [utilities] had forced solar proponents into a burn rate of $350,000 a week. It was unsustainable.
Solar Choice threw in the towel in January.
By outspending the grassroots efforts and confusing voters, utilities were able to keep the Solar Choice initiative off the ballot. And by then, they had such a head of steam they figured they should lock it in. So they kept gathering signatures and got the Smart Solar initiative on the ballot. That’s Amendment 1.
Utilities know their pro-solar messaging is deceptive. Sal Nuzzo, the policy director of a conservative, Koch-funded, utility-backed Florida think tank, the James Madison Institute, more or less conceded as much at an industry conference recently. He told the assembled utility execs that the Smart Solar amendment was "incredibly savvy," that they should learn from it that "solar polls very well," and that they should "use a little bit of political jiu-jitsu" by adopting "the language of promoting solar."
Utilities are using pro-solar language to trick voters into supporting monopolies that are slow-walking solar. Voters would absolutely oppose the intent of the measure if it were stated clearly. Utilities know this. Everyone who has followed the issue knows this. Nonetheless, in March, the Florida Supreme Court ruled — in a 4-3 decision, with all four Republican-appointed justices voting on the side of utilities — that it was not deceptive. (Advocates recently a motion to reopen the case.)
So now, instead of the pro-solar measure that they want and probably still think they’re getting, Florida voters will confront a confusingly worded, vaguely pro-solar-sounding measure that would lock the state’s utilities in the stone ages.
The policy dispute behind utility opposition to rooftop solar
If the larger threat for the utilities is distributed energy, the short-term threat is a policy called net metering.
Net metering says that utilities have to pay people with rooftop solar panels the retail rate for the electricity they produce. Theoretically, this means a solar household with enough panels could zero out its utility bill. Some 44 states currently have some form of the policy in place, though it has alarmed utilities enough that 19 states are currently considering changes.
Utilities dislike net metering because it literally forces them to pay competitors (who used to be customers) premium rates for power.
Utilities say those solar households and businesses are still using the grid for backup power and stability, but that by reducing or zeroing out their bill, they aren’t paying their fair share for the upkeep of the grid. Utilities characterize this as a subsidy from non-solar (usually poorer) households to solar (usually wealthier) ones.
Solar advocates counter that rooftop solar also generates considerable benefits for the grid and other ratepayers. After all, it involves customers volunteering their own property and investment money to build utility infrastructure. It is distributed infrastructure, but it is infrastructure nonetheless, and it avoids further infrastructure costs.
Solar tends to generate the most power during times of peak demand, when utility power is at its most expensive, so it saves money. Because rooftop power doesn’t have to travel far to be used, it cuts down on distribution grid expenses. At enough volume, it can help utilities avoid investment in new power plants.
All of this has been studied by a number of state utility commissions. Recently, the Brookings Institution did a survey of those studies and found a fairly robust consensus that rooftop solar generates more net social benefits than it costs.
However, this debate somewhat misses the point. Rooftop solar may create more benefits than costs, but the benefits are widely diffused, and the costs (in more intensive grid management and lost recovery of fixed grid costs) are concentrated on utilities. Utilities say they are trying to protect ratepayers, but in practice they are trying to protect shareholder returns — and there’s no doubt that rooftop solar threatens them.
Why utilities would lose money on rooftop solar
You see, utilities don’t make money selling power. For that, they can only recover their costs (the price of operating as a monopoly). Where they make money is on big infrastructure investments in power plants, power lines, transformers, and the like. For those investments, they are granted, by law, a guaranteed rate of return. That’s how utility shareholders make their bank.
So "avoided power plant and grid costs" may be a net social benefit, but to utilities it just means lower profits. Distributed energy means that customers buy less utility power, and if customers buy less utility power, utilities have more trouble justifying big infrastructure investments. That’s why they don’t like rooftop solar. Ratepayer welfare has very little to do with it.
So Florida utilities want to lock in their monopoly over the sale of distributed energy while they are at their most powerful, before it gains a foothold. Now they’ve got PSC commissioners going around saying — and I’m not making this up — "‘Sunshine State’ is just a license plate slogan."
The current political situation: Polls show voters shifting toward "No," but not fast enough
Amendment 1 does seem to be ticking some people off. A host of newspapers have editorialized against it. PolitiFact rated the Yes campaign’s claim that the measure would "protect seniors" false. ("If there were no amendment at all, the effect on consumer laws and regulations would be the same.")
A dot-com millionaire (and former Republican) is jumping in against the initiative with $100,000 and a social media campaign. Former governor and senator Bob Graham is lobbying against it. Florida icon Jimmy Buffet has spoken out in opposition.
Then again, Florida utilities have spent almost $30 million this year, $20 million on Amendment 1 and another $9.3 million on friendly legislators, preparing for what the Miami Herald calls "a prolonged war against rooftop solar."
This is walking-around money to big utilities, but grassroots solar activists can’t spend anything like it, so the No on 1 campaign mostly depends on earned media.
The advocacy is doing some good. The latest poll, by Civis Analytics, shows that momentum has shifted toward No in the past month.
In particular, opinion seems to be shifting among Democrats, who are listening to their leaders and opinion makers inveigh against it.
But Yes (51 percent) is still substantially beating No (37 percent).
Even with all the undecideds on its side, No can’t win. It looks like the measure will pass, unless opinion shifts rapidly over the next week or so. [Correction: As several people have reminded me, ballot measures need 60 percent of the vote to pass in Florida, so No just needs to get up past 40, which looks entirely possible.]
If it does pass, Florida utilities will have pulled off one of the most shameless, bald-faced cons in political memory, exploiting voter fondness for solar power to protect a monopoly incumbent against cleaner, more nimble competitors.