From candles to sun

On September 4, 1882, Edison illuminating company launched the first electrical generation. Today large power plants are heirs of this modest station, located on Pearl Street in Manhattan that, powered by coal, supplied power to 400 bulbs from a total of 82 customers.

In the mid-20th century was admitted as certain that the electricity service was a natural monopoly, which only could run with few providers to get adequate pay for large investments required in generation and grid. So, vertically integrated companies from production, transmission, distribution and sale of electricity, mostly in public hands, were created.  The faith in the market as optimal resources organizer, materialized in legislation which in the 1990s tried to introduce competition in that market. The way to achieve it was to privatize entirely, as in Spain, or partly, as in France, those utilities.   Competition was only limitedly reached and settled on these foundations, their business model has generated continuous and abundant benefits to its shareholders that have been accompanied, generally speaking, with improvements in the service’ quality even not always synchronized at the same time.

The technological changes that make possible a generation distributed in multiple production units that are smaller and closer to the consumer, are challenging this model.

With the fight against the deficit as a flag, the 2013 Spanish law of the power Sector discourages incorporating technological change. Its article 9 considers the so-called self-producing power an alternative source of electricity generation from outside the borders of the electrical system. In addition, enforces the obligation for those producers to contribute to the costs and services of the system, if only one of their kW passes through the electricity network.

They are well other approaches those coming from Brussels. On Wednesday, July 15, the European Commission presented its guidelines for designing a new electricity market and reach a new agreement with consumers. Its purpose: promote the implementation of a strategy to combat climate change. The first pillar: empower consumers. Better information that allows to know the elements that make up the prices in order to compare them and decide which provider should be better; lower bills through individual self -generation and energy storage options or increase their participation through collective schemes – several consumers empower to a third party to manage their interests together – either to generate, store, or buy.

On the other side of the Atlantic, we find same energy companies at the forefront of the change to lead it and avoid being swept away by the technological tide, which no legal obligation will be able to stop.

San Diego Gas Electric has proposed to the entity in California making the functions of our Committee on the markets, a reduced rate – Yes, you read well, reduced – for consumers that will enable it to access the electricity stored in its batteries during agreed hours and mostly self-generated. Thus, it plans to better manage demand bottle necks without pumping more C02 into the atmosphere.

The emergence of storage batteries of higher capacity and reliability, which will improve, combined with the price drop of the photovoltaic panels, makes more reliable and competitive power with that origin; but progress will not end here, as the Model T was not the last word of Ford Automotive. As sellers of candles had to accept that electric light relegated them to provide for religious or unholy ceremonies, electricity companies must assume that its business model sit today in quicksand. They have the capacity to lead change and contribute to a carbon-free economy by proposing a better deal, more cooperative, economic, informed and flexible to their consumers. Our Governments should, for the benefit of all, encourage that change instead of treat it as the dream of Robinson Crusoe; but with taxes included.

Enric R.Bartlett Castellà. Professor ESADE Law School (Ramon Llull University)

This article was published in Spanish in “Expansión” August 4th 2015, p.31

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