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Patrick McGarry's picture
Senior Director / Customer Success PCI

Patrick recently joined PCI as a Senior Director in May, 2019. He owns over 32 years of experience in commodity trading and owns an extensive record working closely with energy market...

  • Member since 2004
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  • Oct 7, 2021
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With all the change associated with technology, changing load profiles of electricity demand, skyrocketing fuel costs, climate change policy impacts, I believe the challenge addressed in this article presents the highest likelihood of impacting the utility industry for generations to come.

In a significant way.

There are no easy answers.

Traditionally, we viewed electricity as a commodity. A commodity necessary to survive in our personal and professional lives.

How can we be fair and compassionate and yet not create moral hazards ?

The solution to this question will require courage and the highest form of leadership in addition to various stakeholders working together to agree to a solution.

What do you think?

 

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Matt Chester's picture
Matt Chester on Oct 7, 2021

Is there any chance of a government step in, similar to a bailout for the companies but maybe being more justified because it's assisting low-income houses that were challenged during COVID and keeping the utilities running smoothly, something that's integral to daily life (much more so than some other companies that have seen government bailouts)

Patrick McGarry's picture
Patrick McGarry on Oct 7, 2021

Matt-

Given there is unprecedented growth in the role of the federal government in nearly every aspect of our life during the past two years, there is definitely a chance.

 

But where does it end? Debt forgiveness ? Rent forgiveness? Unpaid utility bills ? When does it end?

 

The longer things continue, the more people will view utility services as an entitlement and the government is now owning all the utilities either directly or indirectly.

 

The day of reckoning is coming in regards to the answer to all these questions.

Bob Meinetz's picture
Bob Meinetz on Oct 7, 2021

Patrick, no doubt some consumers have abused moratoria by using excessive amounts of electricity during the pandemic, believing payment for it would never come due. An optimal solution, IMO, would have the federal government offering relief based on a percentage of the average per/kWh consumption of U.S. residential electricity customers before the pandemic, multiplied by their local residential rate.

Extending the most debt forgiveness to those who use the least amount of electricity, to me, seems like the most socially equitable arrangement. But from ten different people you'll get ten different answers.

Patrick McGarry's picture
Patrick McGarry on Oct 7, 2021

Bob-

You raise an interesting thought for a solution. To some extent, your thoughts mirror what ERCOT is implementing in regards to the credit default uplift charges.

I also think this event could finally be the impetus for "time of use" rate designs rather than the current model which really doesn't distinguish when we consume electricity.

 

In 2015, a movie called "Eye In The Sky" came out and highlighted the tanglement of legal, military, and moral issues regarding drone strikes.

Utility executives are faced with a tanglement of financial, ethical, and the issue of setting precedent on these unpaid bills.

 

No easy answers for sure.

Barry Jones's picture
Barry Jones on Oct 7, 2021

Excellent topic Patrick. I used to believe local generation could solve some of that - i.e., local markets - but at the end of the day operating costs will drive that imbalance anyway. Regulations were supposed to keep this in check. Maybe power marketing administrations (PMAs) such as SWPA can pick up that slack and address the cost/service without continent and utility-wide mass regulation?  

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