From Energy Consumerism to Democratic Energy Participation

by Joseph Tomain

September 02, 2015

The essence of the argument that a new energy and environmental politics is needed is based on the idea that our traditional energy path (as well as its underlying assumptions) has outlived its useful life; the traditional energy narrative is stale. Cheap, but dirty, fossil fuel energy has played a significant role in contributing to economic growth and to the political authority of the United States for most of the 20th century.  By the end of the century, however, the fundamental economic assumption of traditional energy policy has proven to be seriously flawed. Fortunately, a new narrative about a more democratic energy and environmental future can be constructed that can empower us to critically assess traditional policies as well as re-evaluate existing legal and political structures.

How, though, does a politics of a clean power future connect with democracy?  The central democratic principle is to promote greater participation and voices in institutions both political and economic. With that quick definition, a new, more democratic energy and environmental paradigm affects the production and delivery of energy; its consumption and control; its regulation and enforcement; and, its governance and legal institutions.

Production and Delivery of Clean Energy

Two significant changes in the production and delivery of electricity are well underway. First, today’s electricity providers no longer resemble their historic counterparts as the provision and delivery electricity has become more complex. Although vertically integrated investor-owned utilities (IOUs) still supply over half of the nation’s electricity, the business structure of electric power providers now assumes multiple forms. Merchant generators, independent system operators, as well as independent or merchant transmission companies, among many other business forms, are remaking the electric industry and its regulation.[1] There is an upside to this complexity.  As more actors enter the market, competition for production, delivery and ancillary services increases and consumers should enjoy lower prices and more options.

Second, decentralized power generation, also referred to as distributed generation (DG) or distributed energy resources (DER), provide customers with greater choice. “Once satisfied with a simple arrangement where utilities provided services and customers bought power on fixed plans, individual consumers and companies increasingly want to control the production and delivery of their electricity, and enabling technology has become available to allow this.”[2] More importantly, DG/DER can increase grid reliability, reduce congestion, reduce the costs of long-distance transmission, increase efficiency, and expand the number of energy resources used to produce electricity.  By way of example, it is been estimated that 80 to 90% of all grid failures begin at the distribution stage.  Consequently smaller-scale distribution systems can enhance reliability from the bottom-up rather than from the top down.[3] Additionally, the smart grid,[4] with its two-way information, as well as energy, flows can improve information to consumers through better forecasting and improved load-balancing, while individual consumers can serve as generators by selling electricity back to the grid through plug-in electric vehicles.[5]

Consumption and Control of Clean Energy

Similarly, consider that the consumption and control of energy is now moving away from IOU dominance down to consumers. As noted above, power providers are offering a greater range of services as they participate in regulated and unregulated markets while paying more attention to their customers.  IOUs no longer monopolize the power production market, instead, they must compete with non-utility providers of various configurations.  On the demand-side, opportunities to increase market competition are also available.  Local governments or private firms can form entities known as a power aggregators that can reduce collective action problems by grouping together a large number of small consumers and serve as buying agents to negotiate contract terms and rates for them.[6]

In addition to increased competition, smart electricity meters, programmable appliances and thermostats, a variety of energy apps, combined heat and power, microgrids and virtual power plants[7] all provide consumers with the power to control consumption at prices they prefer.[8] In this way, consumer choice is expanded and participation in and control of energy markets expands as more “household and businesses [become] more active participants in [the electricity] infrastructure.”[9]

Regulation and Enforcement of Clean Energy

The regulation and enforcement of a clean power regime also moves from producers to consumers as choices increase.  In a clean economy, there are more producers, more and varied technologies, and increased consumer choice resulting in greater market discipline thus reducing the need for central government enforcement. Regulation and enforcement at the local level would mean greater access by citizen-consumers and therefore more responsive government behavior.[10]

From the supply side, given the radical changes necessary to move to this clean energy future and away from fossil fuels, not only will utilities need to redesign their business models, regulators will need to accommodate those changes as well as shape developing, and more complex, electricity markets. Indeed, it is quite likely “that as the electric power system becomes more participatory, the importance of a broad public utility framework to support planning, coordination, an innovation only increases.”[11]  Thus, innovative utility business models and innovative regulations will turn, in large part, on how consumer responsive those innovations actually are.  Notably, consumers are taking on more active roles in the energy game as they “control[] active, surplus generation resources available to inject power into the grid.”[12] In other words, consumers both consume and produce energy and put that surplus energy back into the grid.

Governance and Legal Institutions of Clean Energy

Finally, the governance and legal institutions surrounding a clean energy economy move, at least in part, from the federal to the local level.  Citizen participation in energy and climate actions can take place more easily whether it is a movement to ban fracking in the community,[13] reject windmill sites, adopt local energy efficiency standards, or to implement energy-efficient and clean energy-based building codes.[14]

 Local, democratic actions need not attempt to boil the ocean, nevertheless they have a vital role to play in developing a forward-thinking energy and environmental ethic.  Local energy and environmental action is directly linked with democracy, as people who engage in those activities say that they do so because of “the importance of building community; doing the ‘right thing’ irrespective of outcome; leaving a legacy of trying to avert tragedy for future generations, even if tragedy ensues; and establishing habits and patterns that will equip us and future generations to live in a very different world.”[15]

Local energy and environmental action is a reality not only a possibility. By engaging in such activities such as 350.org[16] and voluntary carbon action reduction groups,[17] individual behavior is changing as we reorient our political lives from energy consumerism to democratic energy participation.  Proactive involvement with the energy and environmental complex at the local and individual levels is a significant change in thinking about the future. Our actions today do not count as short-term economic losses through reduced consumption or by paying the costs of environmental adaptation or mitigation, instead participation is viewed as a gain in greater democracy and consumer control.  Further, individual action leads to behavioral changes, which contributes to the greater good. By way of example, just in the category of efficiency improvements, individuals report switching from incandescent to compact fluorescent light bulbs and purchasing more efficient hot water heaters, furnaces, and toilets, as well as installing programmable thermostats, ceiling fans and better insulation all to the end of smarter and more controlled electricity consumption.

Additionally, local governments can make decisions about how their buildings are built such as whether they should be LEED certified.  Local governments can also make decisions about the fuels to be used in and the vehicle efficiency standards of their fleets. Thus, local regulation of diverse energy resources can enhance protection for those natural resources as well as facilitate energy development planning.[18]  Well thought out planning for a community’s energy future, can help either avoid or defer the need for costly expansions of transmission and distribution to the benefit of both utilities and consumers.[19] In this way, then, planning goes contrary to traditional utility regulation that rewarded the utility for its capital investments.  In other words, investment decisions shift, at least in part, from producers to consumers.

Decentralized, small-scale, labor-intensive clean energy industries and activities should offer a locality a competitive advantage by stimulating jobs,[20] innovations[21] and investments.[22]  Further, local government can serve as “policy laboratories” that engage in regulatory experimentation, which should promote efficiency gains through competition and develop best practices for the local use and distribution of energy. Local governments can also engage in public education through the accumulation and dissemination of local knowledge, enable localities to scale energy activities to the tasks most suitable to them, and, search for cooperative solutions with and among other layers of government. 

The anniversary of Katrina, then, points us to a new energy future. It is a future that sees the federal government taking a lead in climate change and it is a future that is more sensitive to the interconnections between two complex systems – energy and the environment. Moreover, as we pay more attention to energy and the environment we pay more attention to the needs of consumers and their power to choose than we have in the past.  In the past, our energy sites were focused on centralized large-scale production for the end of economic growth. Today, instead, we seek a decentralized world in which energy production and consumption do not despoil the human and natural environments.

 

 

 

 

 

 

 


[1] Sonia Aggarwal & Hal Harvey, Rethinking Policy to Deliver a Clean Energy Future, 26 Electricity J. 7, 12 (October 2013).

[2] quadrennial energy review: energy transmission, storage, and distribution S-5 (April 2015).

[3] Peter Asmus, Microgrids: Friend or Foe for Utilities?, 153 Pub. Util. Fort. 19, 20 (February 2015).

[4] Joseph P. Tomain, Smart Grid, Clean Energy and US Policy, 13 J.  Competition and Reg. in Network Industries 187 (2012).

[5] Hannah J. Wiseman, Urban Energy, 40 Fordham Urb. L. J. 1793 (2013);

[6] Office of Ohio Consumers’ Council, The Basics of Governmental Energy Aggregation (2011).

[7] James Newcomb et al., Distributed Energy Resources: Policy Implications of Decentralization 46 notes 36 and 87, 26 Electricity J. 65 (October 2013);   Peter Behr & Emily Holden, Grid: An Extension CordRemedy for Coal Plant Retirements , EnergyWire (March 23, 2015); Peter Asmus & Mackinnon Lawrence, Virtual Power Plants: Demand Response, Supply-Side, and Mixed Asset VPP: Global Market Analysis and Forecasts (2014).

[8] American Council on Renewable Energy, Evolving Business Models for Renewable Energy: 2014 Industry Review 5 (June 2014).

[9]  William Boyd, Public Utility and the Low Carbon future, 61 U.C.L.A. L. Rev. 1614, 1628 (2014).

[10] Garrick B. Pursley & Hannah J. Wiseman, Local Energy, 60 Emory L. J. 877, 947-48  (2011).

[11] Boyd, supra note 27at 1682.

[12] Farrokh Rahimi & Sasan Mokhtari, From ISO to DSO, 152 Pub. Util. Fort.  42 (June 2014).

[13] David B. Spence, The Political Economy Of Local Vetoes, 93 Texas L. Rev. 351 (2014); Hannah J. Wiseman, Governing Fracturing from the Ground Up, 93 Texas L. aw Rev. 29 (2015).

[14] Naomi Klein, This Changes Everything: Capitalism vs. Climate 10 (2014).

[15] Sarah Krakoff, Planetarian  Identity Formation and the Relocalization of Environmental Law, 64 Florida L. Rev. 87, 90 (2012).

[16] 350.org is a grassroots organization that coordinates of global network of public actions. Its homepage can be found at http://350.org/about/what-we-do/.

[17] See Krakoff supra note ___ at 107-33. (Florida)

[18] Uma Outka, Intrastate Preemption in the Shifting Energy Sector, 86 Colorado L. Rev. 927 (2015).

[19] Joseph Weidman & Tom Beach, Distributed Generation Policy: Encouraging Generation on Both Sides of the Meter, 26 Electricity J. 88, 101-03 (October 2013).

[20] E2 Environmental Entrepreneurs, Clean Energy Works for US: 2013 Year-in-Review and Q4 Report (February 2014); American Council for an Energy-Efficient Economy, How Does Energy Efficiency Create Jobs?(undated); Rachel Gold, State by State, Appliance Standards Save Money, Create Jobs, and Protect the Environment (May 25, 2011); Casey Bell, Proving Energy Efficiency Creates Jobs: Seeking a New Standard Model (January 22, 2014); ACORE, CalCEF &  Climate Policy Initiative, Strategies to Scale-Up U.S. Renewable Energy Investment (2013); Environmental and Energy Study Institute, Fact Sheet: Jobs in Renewable Energy and Energy Efficiency  (2014); McKinsey Global Energy and Materials, Unlocking energy Efficiency in the U.S. Economy (July 2009).

[21] Sara Hastings-Simon, Dickon Pinner & Martin Stuchtey, Myths and Realities of Clean Technologies (April 2014). 

[22]  REN21, Renewables 2014 Global Status Report  72 (2014). 

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