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May 28, 2024
Op-eds

The Case for Utilities to Get into the Long-Term O&M Business


The Case for Utilities to Get into the Long-Term Operations and Maintenance Business

Much has been written about the monopolism of the US utility industry. None a bit more hilariously than John Oliver’s coverage of the industry here. While the case for centralized generation was necessary for our energy system in prior generations, today’s emerging technologies give us the opportunity to boldly rethink our energy infrastructure. Specifically, distributed generation and dynamic demand-controlled response can build a more efficient, cost effective and equitable energy system for all.

Driven by large capital requirements and necessary regulatory and safety oversight, utility companies have built and maintained the energy infrastructure in our country for generations. In so doing, they have also earned a high degree of trust that creates an incredible opportunity for them to lean into the next chapter of our energy landscape. Trust, conveniently, is what the distributed generation industry lacks, lost through a decade of unchecked greed and predatory sales practices. Utility companies are uniquely qualified to revitalize and support distributed generation, while building new recurring revenue streams.

Utility companies would benefit from increasingly working alongside private enterprise to facilitate distributed generation and maintaining the ongoing operations and maintenance of small-scale systems. Utility companies could immediately add value to a promising but troubled industry by 1) facilitating quality control for local installation companies, and 2) coordinating or directly providing ongoing maintenance to ensure systems receive the necessary maintenance to deliver system capacity potential. 

Some utility companies have partnered with TPO programs like Sunrun, but this model strips many of the benefits of solar from homeowners and end users (i.e. tax credits) and has exhibited weakness by misplacing the burden of maintenance with a disincentivized third-party. Not only would O&M lines of business serve as a new and recurring revenue source for utilities, but it could ultimately help suspend the burden of increasing rate base and cost increases that threatens homeowners and small businesses as well. Instead of continually spreading the cost of new generation across their service areas in the form of an increasing rate base, cost adjustments that are ultimately collected by “fat cat” independent power producers, utility companies could adopt a maintenance-based subscription model that delivers increased value to more individuals across their service area, helping to build equity and wealth for more families and small businesses. Such a system would also ensure job security for employees of forward-looking utilities and increase shareholder value for utility companies, serving all utility stakeholders.   

The next generation of energy technologies is coming quickly. Utility companies stand to benefit their communities more broadly by embracing their evolving role within a new energy landscape that isn’t monopolistic nor based on centralized generation and distribution.

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