My sense is that public opinion of the power industry is worse than ever. I have no data to back that feeling up, admittedly. The intuition is mostly based on the myriad of articles I read every week now about public outcry over things happening in the industry. The latest I came across is this Hill report on California’s decision to keep open various non-renewable power plants and the backlash it has inspired.
From the Diablo controversy in California to customer dismay over rate increases in Wisconsin, the problem is failing to meet expectations. Some expectations of power companies are non-negotiable: Keep the lights on and make sure your equipment doesn’t cause historic wildfires. But in a lot of these cases, utilities; regulatory agencies and legislators made unnecessary promises.
Here’s an excerpt from that Hill article that details the promises California’s legislature made regarding the state’s power portfolio:
“California committed in 2018 to achieving a 100 percent renewable energy-powered grid by 2045, per legislation signed by then-Gov. Jerry Brown (D).
Gov. Gavin Newsom (D) followed up last year with interim targets that aim for 90 percent renewable energy by 2035 and 95 percent by 2040. Separate legislation, meanwhile, urged carbon neutrality no later than 2045, while also setting an 85 percent emissions reduction target for that year, in comparison to 1990 levels.
The move to expand the Aliso Canyon facility’s capacity was also perceived as an about-face from Newsom’s campaign promises in 2018 — at which time the then-lieutenant governor told a reporter he was “fully committed”to shutting down the site entirely.”
If the powers that be in California never committed to such lofty and specific goals, would there be any controversy right now? I don’t think so.
In negotiation theory there is a very basic principle called the anchor. I first learned about the concept in the book ‘Never Split the Difference’, a negotiation book written by ex-FBI lead hostage negotiator Christopher Voss.
According to Voss, an anchor is the idea of introducing a specific piece of information early in the negotiation process in order to influence the other party's perception of what is fair or reasonable.
Voss argues that the first piece of information presented in a negotiation, can have a powerful influence on the direction and outcome of the negotiation. He advises negotiators to use anchors strategically in order to gain an advantage in the negotiation. For example, if you are selling a car, you might start by presenting a high anchor price in order to set the baseline for the negotiation and make the final sale price seem more reasonable.
According to Voss, there are several ways to effectively use anchors in negotiations. One technique is to present an anchor that is slightly higher than what you are hoping to achieve, in order to give yourself room to negotiate down. Another technique is to present an anchor that is very high or very low, in order to create a sense of urgency or to shock the other party.
Voss also emphasizes the importance of being aware of the anchor effect and avoiding being swayed by the other party's anchors. He advises negotiators to consider the context of the negotiation and to be prepared to adjust their anchors as needed in order to achieve their goals.
Voss does a good job formalizing this glitch in human psychology, but it’s pretty intuitive. If your kid has no Christmas expectations and gets a bike, they’ll be thrilled. If you promised them a PS5 and a bike and they only get a bike, they’ll be crying in their room.
Admittedly, utilities cannot ultimately control what promises election-obsessed politicians make. They can, however, try to control the narrative through different PR tactics. If legislators have made energy commitments you know are unrealistic, make sure every journalist in your region knows about it. Here’s a good example out of Nevada.