This Is How Electricity Rates Are Actually Set
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What is the main topic discussed in this episode?
Gain insight on the innovators, disruptors, and tech-driven trends shaping today's complex economy. I'm Carol Masser. And I'm Tim Stenovek.
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Hello and welcome to another episode of the All Thoughts Podcast. I'm Tracy Alloway.
And I'm Joe Weisenthal.
Joe, I have big news for you.
Go on.
I'm an electricity generator now. Oh yeah, tell me what's up with that. This is big news. In my personal life, I am finally the proud owner of a pretty big solar panel that is feeding into the grid in Connecticut.
How's that going so far? Like, are you no is it So I
got one? Do you have
lower electricity bills?
I got one electricity bill so far and it was about twenty dollars for a few weeks, which is amazing. However, I have also experienced my own intermittent energy problems because we are recording today on December fifth, and in case you don't know, it's been snowing up in New England. And the solar panels are covered with about eight inches of snow. So there's no electricity.
Yeah,
all the electricity is out. We have a power generator, so that's kicked on. But I'm now learning one of the downsides of renewable energy.
No, it's like perfect. This is the end of the conversation right here. It's cheap, but it's intermittent.
It's cheap and intermittent. Yeah, that's basically it. But you know, it got me thinking. I'm not in Connecticut at the moment. We are both in Washington, DC for a big energy conference. And because I am now an electricity generator of sorts and I feed into the grid that is owned by a giant utility, we have never actually interviewed someone from a utility. That's right. I don't think we have. I don't think we have either.
either. And I have to say, and that now this is starting to make sense to me, that like how uh utilities work, how pricing in particular works for electricity, is this incredible black hole in my knowledge. Because This has come up, but you know, we're not called customers. We're called rate payers. And I know that in many markets there's this negotiation where there's some utility commission or something like that. And the utilities have to figure out, okay, we spent this much and can we raise our prices this much, et cetera. And then, you know, I know there is in some places sort of live auction markets and how the weather changes, the price changes, but I really find this incredibly Hard to wrap my head around.
I guess basically the question of why you pay what for electricity.
Yeah. So two things here. Number one, it seems incredibly complex because of all the factors that you just laid out, including the patchwork of different regulations for different states and the limits there. And also, well, the political tensions as well. That's one thing we can maybe talk about. But the other thing is It feels like the whole system is becoming more and more complex. Because you have more renewable energy coming on, a lot of that renewable energy, you know, you get credits for feeding that into the grid, which means special people like me are no longer actually paying that much for electricity, but we're still drawing on the resources of the utility.
There and I guess there's really two things because there's this rise of sort of distributed energy, rooftop solar and things like that, new forms of energy production. And then something that comes up a lot the resumption of load growth for the first time in decades.
That's right.
And so you have the renewables, you have load growth, you have this impulse from the public and the corporate sector to reduce emissions overall, net zero there's always net zero press releases going out over the years.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–10:54
2
Why do electricity rates seem high despite the growth of renewable energy?
10:54–19:18
3
What role do fixed infrastructure costs play in residential vs. industrial rates?
19:18–37:18
4
How does Duke Energy calculate its revenue requirement and allocate costs?
37:18–44:07
5
What challenges do regulators and consumer advocates pose for rate design?
44:07–45:42
Speakers
6 identifiedMore from Odd Lots
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