May 7, 2021

Joy E. Seitz

Is Tesla a public service?

Serving solar customers for over 20 years, I have seen first-hand the demand by customers wanting to control their utilities. They want predictable usage, price, and the ability to generate their own power, and if they are lucky — receive a financial benefit for doing so. Many consumers — especially in our post-pandemic reality — hate being controlled. And historically, utilities are monopolies. Not just in Arizona but across the country. Solar gives consumers some measure of independence from those monopolies. With the emergence of solar, early adopters were excited to control, at least some part of their utility future. But there is still an entire infrastructure of oversight, regulation, and transparency that works to make solar work. Regulations protect consumers from bad actors, help prevent anti-trust violations, set forth standards of performance, and provide a system where companies and individuals can participate in the creation of energy policy in a transparent and collaborative way.

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Enter “disruptive technology,” and suddenly, this conversation gets interesting.

We are now about to embark on a new level of control for consumers, led by private enterprise that could spell big wins for business and big trouble down the road for consumers. Packaged under the “take control of your own destiny moniker,” this includes a new wave of solar batteries and the companies moving the conversation about technology disruption forward. One such company is right here at home; Tesla. On a recent earnings call with shareholders, Tesla CEO Elon Musk told attendees that his batteries can be connected together and subsequently, act as a defacto, independent utility. He went so far as to say his technology could be relied upon when traditional utility companies fail or experience an emergency, clearly alluding to the Texas debacle this past winter. While interesting, this theory poses a myriad of functional, systems, and ethical issues.

Joy E. Seitz is CEO of American Solar.

So the question emerges: Can moonshot thinking move sustainability forward? Or does it invite a whole host of ethical, moral, and logistical problems?

I pose this question to all utility regulators, not only in Arizona but the entire United States: Has battery technology come far enough that regulation as a utility be pondered?

To put things in context: In 2009, the Arizona Corporation Commission had a docket open to decide if solar providers should be regulated. The Solar Alliance applied for a Declaratory Order that providers of certain solar service agreements would not be considered Public Service Corporations. The Alliance was an alliance of manufacturers, integrators, and financiers dedicated to accelerating the development of photovoltaic (PV) energy in the United States. The Solar Alliance specifically targeted efforts to help legislators, regulators, and utilities make the transition to solar power by providing technical and policy expertise. In the initial filing, The Solar Alliance mentioned an AZ Supreme Court case Natural Gas Service Corporation v. Serv-Yu Corporation, 70 Ariz. 235, 237-38 219 P.2d 324, 325-26 (1950). This case considered eight factors to consider when ruling on an entity being regulated by the Commission. One of the eight factors is “Actual or potential competition with other corporations whose business is clothed with public interest.” Though solar received an exemption from regulation as a result of this process, the issue of battery storage under the definition of a “utility company,” was not addressed.

While I am not a regulator nor a lawyer, I am a native Arizonan with vast experience in oversight and regulatory actions concerning energy policy. Additionally, I am a stakeholder with no golden handcuffs to technology and a passion to protect the future of Arizona ratepayers. I believe it is my moral obligation to stay curious, ask questions, and demand answers. Any entity looking to supply energy, in a hot desert, should willingly provide answers that all stakeholders can understand.

On the bright side, Arizona has been a leader in energy policy. The utility companies in Arizona have pushed for innovative solutions and facilitated innovative rates to diversify their portfolio and give options to consumers who wanted more control over their power. Also, the urgency around global decarbonization and the role that solar plays in reducing carbon footprints, can’t be overstated.

California wildfires and the Texas grid failure have shown us that we are vulnerable, but won’t we be more vulnerable when private companies are highly incentivized without any guard rails in place to protect consumers? Privately held companies do not adhere to the same moral and ethical constraints that public or municipal utilities are held to; is this a pandora box waiting to be opened? Furthermore, Software-based energy products are based on artificial intelligence. Where is that data being stored? Moreover, these technologies require thoughtful installation and safe practices. Volatile products exist in this industry (see recent explosions of lithium-ion batteries), does it not make sense for municipalities and first-responders to have a say in the deployment of these technologies? Does it not make sense to adhere to standards, best practices, and mitigations that thrive under oversight and regulation?

In our rush to advance the noble pursuit of sustainability, coupled with consumer’s very real desire for control, should we not pause and consider the fact that private companies making claims to become utility providers should be approached with caution?

In her new book, Mission Economy: A Moon Shot Guide to Changing Capitalism, Mariana Mazzucato posits the theory “To get back onto the right path we need to ask ourselves again what sort of role government should play in the economy, and consequentially the instruments, structures and capabilities it requires – both within public organizations but also to foster collaborations between public and private organizations that work together symbiotically – sharing both risks and rewards – to solve the most pressing problems of our time.” [sic]

The Arizona Corporation Commission has created thoughtful policy many states have mirrored. It is time once again for this agency to consider the benefits and the risks inherent in public private partnerships that a proposition like classifying battery banks as a utility suggests. We must examine the facts of today and lay them over what the future of utilities may look like in a world where we all are focused on the delivery of clean energy, and an economy composed of sustainable infrastructure. With rising temperatures, we have no way of knowing if temperatures will reach 120 degrees year-round for Arizona. While we must move quickly, we must also move intelligently to avoid a Frankensteinian “it’s alive!” scenario, where the well-intentioned creations wreak havoc on the villagers.

I applaud Mr. Musk’s desire to disrupt the status quo and advance our society through advanced battery technology. And Moonshot Thinking is great. So long as there is also transparency, fair play, and prudent oversight.

Joy E. Seitz is CEO of American Solar.