THE COLLEGE HILL INDEPENDENT


Through the Wire

Competing visions for a carbon-free electricity grid

by Harry August & Sara Van Horn

Illustration by Natasha Brennan

published November 16, 2018


This article is the first installment of a month-long series,“Through the Muck,” tackling climate change in Rhode Island.

Everyone in Rhode Island—from environmental activists to utility companies—is theoretically in agreement: we must decarbonize our state’s energy system by mid-century. Decarbonization—think wind turbines, solar panels, and electric cars—involves replacing the coal, oil, and natural gas we use to produce electricity, heat our buildings, and power our vehicles with renewable energy. The why is easy: even National Grid, a private company with an almost complete monopoly on Rhode Island’s natural gas distribution, has said that “climate change threatens our quality of life and the livability of planet earth.”

The how promises to be much more complicated. The Rhode Island Division of Public Utilities and Carriers, the government body tasked with regulating the state’s energy companies, envisions decarbonization as reforming our current system, relying on technological innovation and incentivized markets to clean up the grid. In sharp contrast, the George Wiley Center, a social and economic justice advocacy group in Pawtucket, is partnering with the Providence chapter of the Democratic Socialists of America (DSA) to demand the nationalization of the utility grid to democratize and decarbonize how electricity is produced and delivered. But solving the energy crisis does not simply mean keeping carbon out of the air; it can also address the urgent crisis of energy affordability and utility shut-offs in Rhode Island. As Thea Riofrancos, co-chair of the Providence DSA told the College Hill Independent, these two issues are inextricably intertwined: “The profit model that drives the shut-off crisis is the same model that drives the climate crisis.”

 

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Electricity production comprises only 20 percent of all carbon emissions in New England (cars, trucks, and heating homes together make up 60 percent), meaning that greening our grid is not the be-all and end-all of tackling climate change. But there are two compelling reasons for the state to focus on it: first, the electric grid is the lowest hanging fruit. Installing solar panels and windmills is, for the most part, a lot easier than getting rid of every internal combustion engine and gas furnace. Second, most paths to full decarbonization require converting our cars and furnaces to electric, and then greening the electricity that powers them. As more and more of transportation and heating energy comes from the electric grid as well, the stakes of greening the electric grid are only amplified.

So where are we now? And where do we need to go? According to the US Energy Information Administration, Rhode Island gets only seven percent of its electricity from renewable sources, and most of the renewable energy comes, not from solar panels and windmills, but a biogas facility at the Johnston landfill. In Rhode Island, 90 percent of electricity comes from natural gas­—the largest proportion of any state. While many espouse the environmental benefits of natural gas as a low emission “bridge” from coal to renewable energy, the fuel does not present a viable option for clean energy. Natural gas only releases slightly less greenhouse gasses and reinforces our dependence on fossil fuel infrastructure. To keep a reasonable chance of staying within two degrees Celsius of warming (according to the Intergovernmental Panel on Climate Change) we need to get to net zero emissions by 2050—meaning that the electricity sector, the fastest and easiest to decarbonize, should be one of our top priorities.

 

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“Fundamentally, the utility model in New England is broken,” Macky McCleary, administrator of the Rhode Island Division of Public Utilities and Carriers (DPU), told the College Hill Independent. As administrator of the DPU, McCleary heads the agency that regulates National Grid and oversees the process for determining energy rates. Like climate change, the pace of the collapsing utility model is “glacial,” he said. “You don’t notice the creeping problem.”

To understand the true scale of this issue, we have to consider the highly regulated utility business in Rhode Island. For much of the 20th century, selling electrons was much like selling water: a company was compensated by the number of units it sold, e.g. gallons of water or kilowatt hours of energy, and the more energy people used, the more money the company made. In the past few decades, however, regulators have encouraged energy conservation by “decoupling” National Grid’s profit from the exact number of electrons sold.

Instead, National Grid now profits by building transmission infrastructure like power lines, generators, and telephone poles. As Mackay Miller, Director of US Strategy for National Grid, told the Indy, National Grid buys energy from independent power producers and passes it on to customers without a profit; in return, the DPU pays National Grid nine-percent interest on its infrastructure projects. “Our incentives are to add capital to the rate base,” Miller told the Indy, meaning that National Grid is incentivized to build those power lines and generators even when these projects are not in the best interest of the public—or the climate.

According to a report by Acadia Center, a local clean energy advocacy group, National Grid’s business model is “increasingly at odds with new technologies that can optimize the energy system.” Many cheap and green energy solutions—like rooftop solar panels or in-home batteries—create no extra revenue for National Grid. And because they decrease the amount of energy that people need to buy from National Grid, they actually undercut the company’s profit in the long term.

Because of huge investments in these efficient technologies by homeowners and state regulators, the demand for energy from National Grid is plateauing in Rhode Island—slowly undercutting the entire privatized utility model. This is McCleary’s “creeping problem”—a green energy future is incompatible with a utility model that depends on building more and more.

“So you end up having to bend over backwards,” said McCleary, creating more complicated regulatory systems, like decoupling, that try to align the interests of society with those of National Grid. Yet to community groups like the George Wiley Center, this privatized model is the root of the problem.

 

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Beyond concerns of decarbonization and incentives, the utility model is broken in a much more urgent and damaging way. This is palpable at the George Wiley Center’s weekly meetings, where staff provide advice to those facing utility shut offs. Often, the Center doesn’t have enough chairs to seat everyone seeking assistance, Executive Director Camilo Viveiros told the Indy. In 2016 alone, National Grid shut off the electricity of 18,511 households in Rhode Island (in a state of only around 400,000 households).

Last Wednesday, four women attended the meeting, each of whom brought shut-off notices from National Grid. One woman at the meeting, Lisa, who asked to be identified only by her first name, is facing over $5,000 in unpaid bills to National Grid and was scheduled for a formal hearing with the company the next day. After a recent death in the family, requiring Lisa to pay for funeral arrangements out of pocket, and enrolling her youngest child in college, Lisa could not afford her energy bills. The payment plan that National Grid offered, Lisa told the Indy, still required an $800 down payment, which she cannot afford. If she can’t convince the company to reduce this amount, Lisa told the Indy she will have to get a second job on the weekends and make her son work outside of classes to avoid having her heat shut off for the winter. “My story is no different from everyone else’s,” she said. “They make you feel intimidated and belittled. I felt as if they were asking, ‘What do you do with all your money?’”

Another woman at the meeting, Destiny, could not afford to pay her entire energy bill after her second child was born and instead just paid what she could afford each month, usually between $100-150. Until recently, because Destiny’s child was under two years old, she qualified for the infant protection that prevented National Grid from shutting off her utilities. Now that her child is three, this no longer applies, and all of the bills that have accumulated in the past two years are due. Destiny received a notice that she will be shut off this week, and tried to explain her situation to National Grid. “They said it didn’t matter. They don’t care. They just wanted to shut me off,” she told the Indy. “It’s embarrassing. They make it seem like its my fault.”

To Viveiros, this is an outrage. Access to utilities “is a basic human right,” he told told the Indy. “We’re not shy about looking at the root cases of the problem, and it’s clear that anything that is profitized, anything that is commodified, should not be the approach to the problem.” Furthermore, from a public policy standpoint, the system does not make sense: “When people are shut off and forced into a nursing home, who pays for that? That’s the taxpayers. If a family and their kids are taken away from them because their utilities are shut off, who pays for that? The taxpayers. And if someone is forced into a shelter because their utilities are off, who pays for that? So for all of these things, we are subsidizing for the benefit of National Grid making $40 billion and exporting that to the CEOs in the UK.”

 

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The DSA envisions a utility system that is localized, publicly-owned, and democratically-controlled. They outline an energy model that prioritizes decarbonization by eliminating the incentives that perpetuate the use of coal, oil, and natural gas while also stopping shut offs. “There are two pieces to thinking about energy injustice, and they are interconnected,” said Thea Riofrancos, co-chair of the Providence DSA. “One is the affordability issue, and the other is the energy system model. Both of those need to be addressed.” Because renewable energy—like wind farms and deep water sources—are tied to specific localities, production would be distributed and administrative power decentralized, perhaps with municipalities controlling their own generation of electricity.

While the DSA has not drafted a specific plan for this model, (they started the campaign in 2017 and are “sort of inventing it or proposing it as [they] go along,” says Riofrancos), many models of public ownership do exist. In fact, about a third of electricity customers in the US are served by not-for-profit utilities (including the around 5,000 customers of the Pascoag Utility District in Rhode Island). And while public ownership does not guarantee that people will support clean energy, three of the greenest utility providers in the country (Sacramento Municipal Utility District, Austin Energy, and LA District Water and Power) are municipally run, Miller of National Grid wrote in an email. Here in Rhode Island, where support for environmental initiatives are high, pushing for renewable energy will be much easier under a democratically-controlled energy system.

The Rhode Island Division of Public Utilities and Carriers (DPU) offers a competing vision for how to extricate our state economy from the heavily-subsidized fossil fuel industry. While the DSA calls for full socialization to address both climate change and energy injustice, the DPU’s action plan relies on tweaking existing market structures. Administrator McCleary positions his vision for a clean energy revolution as one that is inevitable, but that will only happen fast enough with a nudge, or perhaps a good shove, from regulators like himself. “There’s no way that renewables don’t win,” he told the Indy, “you can’t beat someone who doesn’t pay for fuel.” At the same time, however, McCleary was clear that “The market is not God. It is up to the people to make sure it does the things that it should do.” This market optimism is certainly a deviation from the panic-inducing climate rhetoric increasingly peddled since the IPCC report. But considering the fundamental problems that set National Grid against long-term decarbonization and the radical, rapid transformation required, McCleary’s optimism rests on shaky ground. Even if the market does favor renewables, this optimism in technology and incentives doesn’t necessarily address the current injustices, like rate hikes and shut-offs, within the energy market.

A fundamental difference between the DSA’s and McCleary’s competing visions is simply whether a private company should be profiting off of delivering a basic need to customers in Rhode Island. Because National Grid has a fiduciary responsibility to their shareholders, they are guaranteed a profit margin, resulting in higher rates for ratepayers and, often, disregard for those suffering from shut offs: “They answer to shareholders, not to citizens,” said Riofrancos. But to McCleary and Miller (the strategy director of National Grid), having a privately-owned utility allows for increased access to capital markets, providing more available finances for large infrastructure projects. McCleary told the Indy, “it’s actually quite easy to have utilities do stuff, you just have to pay them to do it.”

There is also the question of democratic participation, or the lack thereof, under the existing profitized model. “Utility regulation is not, in fact, democratic. It is open and transparent,” McCleary explained, “but it is impossible for a democratic process to make engineering decisions.” According to McCleary, this lack of democratic participation does not necessarily exclude public input: “utilities are like unvoted forms of government. Fundamentally, they have to bend to the people’s will.” His argument, however, rests on the assumption that the people of Rhode Island exert some control over utility regulation—something many activists working on utility justice would reject. Citizens’ only access to the DPU is through public hearings, which are often not well advertised. As Riofrancos of the DSA said to the Indy, “the hearings exist, but no one knows about them. The people who know about them are National Grid lawyers.” McCleary also echoed these concerns, stressing to the Indy that National Grid has “dozens and dozens of lawyers to participate in these proceedings and we have three.”

The two visions also differ in their approach to ensuring that the energy transition is fair and that basic needs are delivered to all Rhode Islanders. Public ownership, the DSA believes, is the only ethical means of controlling access to utilities which constitute fundamental human rights. “Energy, gas and electricity,” said Riofrancos, “are part of the many basic needs that individuals have. It doesn’t make sense for a private company to control something as basic as water, something that we need to power our lives.” McCleary and the DPU share the concerns of low-income customers, but prioritize the reduction of utility cost by designing an economic transition efficient that doesn’t cost Rhode Islanders an enormous amount of money. “We know that a transformation is occurring,” said McCleary. “The regulators job is to reduce the cost of that transformation.”

For these reasons, and despite his conviction that the utility system is deeply misguided (“It’s obvious”), McCleary is not calling for a radically new energy system. “One of the biggest misconceptions,” he told the Indy, “is that you need to burn down the entire existing system in order to build a new one.” While Riofrancos may indeed see this as the eventual goal, “I am not someone who believes the revolution is coming tomorrow. I am completely in favor of reforms along the way,” she told Indy. “I would love to see National Grid allow people to only pay a portion of their income and have 80 percent no carbon by 2040. That would be great.” But, she said, “National Grid would resist that   every step of the way.”

 

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To combat this resistance from National Grid and fight for reforms that protect Rhode Island’s most vulnerable, those fighting for a carbon-free grid must build a coalition that prioritizes low-income and working-class Rhode Islanders. “We want to increasingly shift environmentalists to not concede to framing narrow, fault-based, market-based solutions,” Vivieros said to the Indy, solutions that leave out immediate justice concerns. “We are trying to stitch together some of those concerns that have been historically isolated from one other,” agreed Riofrancos.

Eliminating the for-profit model means building a movement strong enough to confront a crisis deeply entrenched in our economic system; that movement would unite environmentalists with advocates for economic and social justice. “It’s not even an option to ignore that kind of coalition building,” said Vivieros. “It’s going to take a long time and we need a long term vision that’s going to be bold and creative enough.”

Transforming the energy grid in Rhode Island alone “can’t really do much in terms of having a global impact on the climate issue,” McCleary told the Indy. “But what we can do is lead. We can show other states that it’s possible to deliver outcomes and improve quality of life at the same time.” Furthermore, Rhode Island is geographically prepared to take charge: it boasts a coastline ripe for wind energy, yet imports all of its fossil fuels from out of state. “It’s completely absurd,” Riofrancos said, “that in a state like Rhode Island we are using fossil fuel-based energy.”

 

HARRY AUGUST B’19 and SARA VAN HORN B’21 were responsible for the Thayer Street black-out last week.