Consumers: take back the grid with co-ops

By Donald M. Kreis

This piece was originally published in The New Hampshire Business Review.

Electric consumers need a New Deal.

Yes, I’m talking about that New Deal – the one from the 1930s. When Congress adopted the Rural Electrification Act of 1936, the nation’s investor-owned utilities had simply refused to serve 70 percent of the continental U.S., consigning millions of Americans to a life of darkness and poverty because they were not in cities or suburbs. This hugely successful New Deal program led to the establishment of customer-owned rural electric cooperatives that are democratically controlled and exist exclusively to serve consumers rather than profit-seeking shareholders.

Today, unlike the 1930s, the problem is an industry that is unable to help consumers take full advantage of sweeping technological change and the vast opportunities for empowerment and savings this represents.

Like 14 other states, New Hampshire has restructured its electric industry so consumers are no longer stuck with their incumbent utility and are free to shop around for electricity suppliers. But from what I can see, this has meant little to residential customers other than leaving them too vulnerable to the unregulated and avaricious among energy firms.

Distributed generation is the most troubling example. Solar panels are now cheap enough to produce that many consumers can afford to acquire them to self-generate and feed excess production back into the grid. But the utilities regard this as an existential threat to their business model and, even worse, many solar companies peddle bad deals to consumers while marketing themselves as virtuous because solar power is renewable energy.

Energy efficiency is another problem. Recently, energy efficiency has cost less than 5 cents per kWh, cheaper than anything else we can buy to meet our household energy needs. But we insist on relying on utilities to deliver that efficiency, which is the equivalent of paying McDonald’s to help people eat fewer Quarter Pounders. We are leaving lots of cost-effective energy efficiency unrealized.

Home energy management is also a pressing but unmet need. Technology exists to allow residential customers to save money by operating appliances, air conditioners, furnaces and other devices when wholesale power is plentiful. But investor-owned utilities are reluctant to offer such services to consumers, and other providers tend to focus on bigger, commercial users of electricity.

And then there is competitive energy supply. Most suppliers are either uninterested in serving small customers or, worse, offer plans that are reminiscent of the worst excesses practiced by unscrupulous (and unregulated) cable and phone providers. Aggregators can pool the demand of lots of small customers but nothing assures they will act in the best interests of those customers.

Industry insiders love to tout all the customer-liberating hardware and software available these days — everything from power storage units from Tesla, to Nest thermostats that can “learn” when you need heating and cooling, to energy management platforms that can theoretically help you take advantage of rates that vary as the electricity supply and demand vary over the course of the day. But here’s a reality check I heard recently from Steve Camerino, CEO of the NH Electric Cooperative, summarizing the perspective of his co-op’s typical member: “I don’t want to change what I do — I just wanna save money.”

That typical member of a rural electric co-op is lucky; she lives in a place where her utility is by definition her agent and must buy electricity, deploy technology and offer services in her best interests. Her co-op will indeed help her save money while helping her avoid disruptive lifestyle changes. But what about the rest of us? 

Those of us in the service territories of investor-owned utilities are victims of the sort of market failure — industry inability and/or unwillingness to give us what we need — that has historically been the moment for co-ops to step in.

Rural electric cooperatives cannot legally expand their service territories. But a state consumer cooperative statute, under which food co-ops typically operate, can accommodate energy services cooperatives. Food co-ops themselves, under increasing pressure to stay relevant as the supermarket chains offer natural and local foods, could solidify their future by expanding into the energy sector.

You may say I’m a dreamer, but Co-op Power in Massachusetts and Cooperative Energy Futures in Minnesota are thriving examples of what I have in mind.

Both are particularly attuned to serving low-income consumers, who tend to get left behind as technology evolves and opportunity breeds complexity. Consumers have the right to seize control of how they use the electricity grid; the best way to make that happen is for them to pool their resources and cooperate. But it will only happen if those of us who understand cooperatives spread the word among electric consumers and policymakers. 

Attorney Donald M. Kreis is New Hampshire’s Consumer Advocate. He is a past president of the Cooperative Fund of New England and the Hanover Consumer Cooperative Society as well as a founding member of the NCBA CLUSA Cooperative Professionals Group, a group of attorneys and accountants who serve co-ops.