By Tara Kalwarski
Americans are using less renewable energy as a share of their total energy consumption than they did in the early 1980s. And the oldest forms of renewable energy, water and wood, are in decline. Since 2000, alternative-energy companies’ shares have risen far less than those of traditional energy companies.
Managing Forward; The Reset Economy
Rewiring the Utility Business
Peter A. Darbee used to dock his three children 50¢ when they left a room without turning out the lights. Now, as CEO of PG&E (PCG), the former investment banker and high school wrestling champion is trying to save energy on a grander scale. Paradoxically, he is helping his customers buy less of his product. “When I tell big customers we would be happy if we sold them less electricity, they look at me like I’ve burned out a few brain cells,” says Darbee. But the logic is inescapable. “You are not making a lot of money anymore building large power plants,” says Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission. “You have to figure out what business you are in, big time.”
How can utilities make more by selling less? Instead of spending $2 billion on a new 1,000-megawatt power plant, it can use the money to insulate homes, pay customers to install more efficient equipment, and make the grid smarter. Those steps would slash power consumption, eliminating the need for the power plant. The CEO would then ask the state public utility commission to raise electricity rates enough to pay for the $2 billion investment—plus a negotiated profit—just as he would for a new power plant. If the commission agrees, the utility gets revenue from its investment.
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