Latest / Not Another Energy Podcast / Imagine This: A World Without Monopoly Utilities
Transcript
- Bethany Ruhe: Hello, hello, hello, and welcome to your new favorite show, Not Another Energy Podcast. I'm Bethany. Teresa Ringenbach: and I am Teresa. Bethany Ruhe: and together we are Bloom Advisory Partners. Today we are going to be a little bit of future thinking. We're start with a big change that just happened recently and as a lot of changes happen based on Taylor Swift and this one is no exception. ⁓ We are about the recent ruling on Live Nation and Ticketmaster. ⁓ and how they are now considered a monopoly and they need to break apart. And while we're not gonna be talking about that particular case, we are gonna be talking about what if something like that happened in the energy space and what would that look like? So Theresa, I'm gonna ask you to put on your futurist hat and let's kind of dive in. Teresa Ringenbach: Yeah, I like this game. I always like the, yes, the what if game. So just real quick, last year, so in 2025 around this time, the Department of Justice actually put out this task force look. And one of the things they wanted to look at was does regulation of electric monopolies ⁓ inhibit competition? Bethany Ruhe: Yeah, this is a fun game. Yes. Teresa Ringenbach: So kind of a timely topic. I don't think anything eventually came of that. know a bunch of people filed comments. But it is one of those things that I know on one hand from the electricity industry, monopolies are there for a reason. All those wires connect. You have one entity to work with. But then you have the flip side, which is has technology sort of lapped the need for a monopoly? Bethany Ruhe: Well, let's start with something that I know is sort of abhorrent to you, but what would you say is one good reason to possibly keep a monopoly utility structure? Or would you land on the side of there is absolutely zero reason? Teresa Ringenbach: I don't think I would ever land on there's absolutely zero reason. I know I hate on monopolies a lot, but there are actually a lot of utilities that do really good things because they have that ⁓ status. So I think the first logical thing is there are areas of their distribution grid that probably otherwise would not be serviced. And you can look at the cell phone industry, which was sort of forced into offering low income programs and saying you need to offer something. You can't just show up and only offer to certain types of people. You also have the same thing in the broadband industry. mean, rural areas were left behind because they found it more efficient and economical to service cities in suburban areas. So yes, I do think there's a purpose for ⁓ monopoly because it ensures that nobody gets left behind and nobody can be denied service. Bethany Ruhe: Okay, so basically you're saying without some sort of a mandate there would be areas where it would not be necessarily profitable to serve and those people would lack access to electricity. Teresa Ringenbach: Yes, I do. Bethany Ruhe: Now you brought up cell phones and broadband and now obviously I came up in retail energy, was constantly comparing itself to the deregulation of the phone industry. So to the extent that you might know, you know, what sort of kicked off that mass kind of deregulation? mean, obviously there are states with choice, right? That are deregulated and allow you to choose your supplier. you know, what did the phone industry or the phone deregulation do that might be, you know, able to be repeated within the electricity industry. Teresa Ringenbach: So I'm going to say I think it already happened, but what didn't happen was regulation. decided to step in and stop that ability to shop everywhere. So what happened in the phone industry was technology and systems hit a point where you didn't need that monopoly to be the only choice anymore. And I think you and I have of lived through the various versions of that. The first was you can choose your long distance provider. Then it was, ⁓ now you can have a cell phone. Then it was everybody has a cell phone. The interesting thing is if you sort of still peek behind that curtain, there are still areas where owns the network, ⁓ It's just not a monopoly, but because of that, Verizon has to provide access to the network. So ⁓ not that different on the electric side. ⁓ suppliers had the capability ⁓ the systems now to trade at that very local level and power across large areas of the United States. ⁓ Bethany Ruhe: Mm-hmm. Teresa Ringenbach: you could do it cheaper. Everybody likes to ⁓ on PJAM right now, but literally what PJAM's purpose was is ⁓ used to call it a postage or sorry. They called them pancake rates. every service territory you went across, there was a rate that was charged to move that power and it just pancaked one on top of the other. So the purpose of PJM or the New York ISO or any of these big transmission organizations was they created a postage stamp rate. So you could move power from New York to Ohio and you only paid one rate to do that. And that was the goal. And because that brought everything down, opened up the doors to, well if I can move it that way, I can move it to your home and you and I can enter into a direct contract and that was the concept. So way of saying what happened in the cell phone industry already happened, Bethany. ⁓ difference is Monopoly utilities have stepped in and said no, no, no, no, no, this is our certified territory and nobody can take it away from us and how dare you and we should be the only ones instead of doing what a lot of them did instead, especially on the East Coast, which is. That's cool. I'll focus on maintaining the wires. I mean, the UK did this too. National Grid is literally just the grid. That is their job in the UK. Just maintain the wires. Keep the power on, keep the lights on, make sure the wires work, make sure nobody connects something that's gonna blow up the grid, and let's all move on. So don't think it's necessarily the monopoly utility part of it. It's this fear of them potentially becoming redundant or not existing. And I think there's ways to do that that says monopoly over here. The rest of it is competitive. Bethany Ruhe: Okay, so let's sort of transition to if there were no monopoly utilities from a customer's perspective, what would that look like? What would the potential impacts be? What would life be like if we woke up tomorrow with no monopoly utilities? Ooh, Teresa's like, you mean my dream? Okay, here we go. Teresa Ringenbach: Hahaha I think first off, there's the potential that the cost to move the power on the local distribution grid could go up because nobody's them back. But the flip side of that is ⁓ can see a world where subdivisions ⁓ in their own localized gen and microgrids and they take it over for themselves. I can see a world where solar providers are essentially doing what cell phone providers did. I'll give it all to you for free. I'll install it as long as you agree to use me. we, that doesn't really happen anymore. Thanks Apple. ⁓ There was a world for very long time where you got everything for free, like all the equipment, and then you just signed up with AT &T or whoever in exchange for that for a period of time. I can actually see that happening. I can see there are so many infrastructure and ⁓ technology companies out there that... I think there could be a very, fast pivot. And weirdly, contrary to the cell phone and broadband band side, I think it might actually start in the rural areas because they would have the space ⁓ that gen ⁓ move that power pretty quickly between different ⁓ disparate properties. Bethany Ruhe: So. about, do you think that this would also unleash just a wave of innovation? So from my perspective, know, lot of the clients that we work with and a lot of the people that we see out there, a lot of these technologies like grid edge behind the meter stuff, they already exist. The issue is getting them to utility scale. So do you think there would just be this tsunami of innovations hitting the grid or do you think it would need to be done as sort of a, your point of not blowing up the grid ⁓ more thoughtful manner? But do you think that customers across the board, know, industrial, residential, small biz, do you think that they would just see this absolute, I'm going to use the word tsunami again, of innovative products and services that they don't currently have access to? Teresa Ringenbach: Yes, I do. I think anytime you open up a market, you see that. can't think of a single market where that didn't happen because it's competition, right? Do better so that you can expand your customer Bethany Ruhe: What do you think stops or prevents monopoly utilities from being more innovative? And we've had this conversation, this was a conversation that's been going on for decades, but I would argue they are still working at a glacial pace to bring existing technology products and services to customers that could have a real impact on their prices and their lives. do you think is the sticking point that ⁓ monopoly utilities aren't working ⁓ do this themselves? ⁓ Teresa Ringenbach: I think it's a combination and to be fair, think they do try to innovate. do. I do. I don't think there's some conspiracy behind closed doors where they're like, yes, let's just use rickety poles and continue down this historic path. ⁓ Bethany Ruhe: Right, but you can't not argue that it moves very slowly, more slowly than it needs to. Teresa Ringenbach: I do. Yes. So my favorite ETS, Energy Thought Summit, shout out to Z Prime. If you guys have never been to ETS, yes. ⁓ It was years ago in Chicago. Bethany Ruhe: We'll see you next week. Teresa Ringenbach: and they had the CEO of Exelon and it was like a little fireside chat and he, I mean he was being funny but he was actually very serious which is utilities are like babies and they can't actually do anything or move unless the commission allows them to. So basically the commission is the one who can pick them up and allow them to walk or run or feeds them and that is their very nature. So Every time they try to do something innovative, it's years of cases and convincing a commission that this is the right idea. And this isn't a bashing of commissions because their responsibility is to make sure that the utilities are good stewards of rate payer dollars. So they can't be as innovative because they're regulated, which kind of goes back to our whole DOJ investigation. And they do try. I, you know, I'm a bit obsessed right now. with what Excel and some of the Minnesota utilities are able to do because they're able to actually put batteries on their grid. So a battery not behind the meter, but on the grid to support it. Tom Ed at one point went through years and years of what should have been a very simple thing, which is, hey, let us have mobile generators that we can move around the grid that we can lock in so when we're fixing something, people don't lose power. Years, right? That seems like a very simple thing. ⁓ that makes sense. So. Bethany Ruhe: Yeah. Teresa Ringenbach: You know it goes back and forth. I'm not saying that there aren't utilities out there who just would like to just get their rate of return. All right, something breaks, I replace it. You know, just good old natural monopoly. But I think more and more of them do actually try to be innovative and they do try to invest in things. You go to any national lab that does electricity work, you will see that they often partner with monopoly utilities to have test beds. those giant helicopters with the huge saws ⁓ out of one of those national lab things and now you see them. ⁓ I do, I live in the Midwest, but yeah. Bethany Ruhe: I've not yet here in Pittsburgh seen a helicopter with a saw on it, but I will keep an eye out for one. Teresa Ringenbach: They're massive and crazy, know there's ⁓ sorts of things that you don't think of in terms of innovative. They just take such a long time that it seems like the market has left them behind before the utility even has approval to use them. Bethany Ruhe: So you'd mentioned specifically what's going on with some things in Minnesota. Is there any kind of underlying reason why one utility might be able to scale up some innovations and technologies a little bit more quickly than the others? I is it their relationship with the commission? I know every area is unique and they have their own whole situation, but is there any kind of commonalities that could be taught or used to kind of cut and paste to another utility to maybe get better results? Teresa Ringenbach: Yes and no. So ⁓ think the first part is the utility has to be motivated to it and that can come in one of two ways. Either they have ⁓ some of targeted thing that's already a formula rate that the Commission has given them that says you do this better you get this. ⁓ So more willing to invest their own dollars not ratepayer money to achieve that. ⁓ The second is a commission that is educated and willing to allow them to do more innovative things. And then the third is much legislation. Is there a statute that just directs them in the commission? Like you don't get a say, you're going to go and do these things. So those are pretty much the three things. Bethany Ruhe: Okay, so we did talk about the task force, so we don't know if anything is going to come of that. But do you think even calling for it in the first place means that there might be some kind of a philosophical shift in how our national government is thinking about ⁓ utilities? Teresa Ringenbach: ⁓ I'm not going to say what the federal government, who knows, the day-to-day shifting. ⁓ There was a group of ⁓ commissioners from different states that actually did file comments. They were the only ones that I saw that basically said, just trust us to be the experts and stay out of it. I don't know ⁓ that's good or bad. ⁓ think ⁓ Bethany Ruhe: Hahaha Teresa Ringenbach: There is this piece that says if one state is prohibiting something and another state is allowing it and it's a good thing in other state, why you keep prohibiting it? I mean, have so many commissions across the US. Some are appointed, some are elected. I don't know which is ⁓ better, honestly. at the end of the day, I there was some federal level that said, hey, you have to learn these basics first to even qualify to be a commissioner. It can't be politically appointed. I think you need a staff that also has to have some sort of ⁓ mandate they will always be on top of the latest ⁓ issues. Political interference into electric markets actually in my personal opinion is one of one Not the only but one of the core causes right now of why? rates are so high Think you know did a podcast last season Bethany where we talked about rates of return in the United States ⁓ are multiples than any other country and we have monopolies that cover everything, so why is that? I just, I know what the solution is, but I guarantee if somebody got in there and said, hey, we're gonna pass a statute that there's gonna be ⁓ competition utilities only get paid based on how well their grid does, we would see a dramatic drop at least initially in how much people pay. Bethany Ruhe: So I'm glad you brought prices up because that's where I did want to go next. Because you had mentioned earlier that costs can potentially go up if there's unfettered access to raise transmission rates. So what are some drivers? So we're working on phasing out monopoly utilities. down the road. What are some possible ways that this could drive costs down for customers? mean, high energy costs are still all over the place. The straight-over moves, things not helping. in our future world, what are some things that could drive savings? Teresa Ringenbach: me think through that because I live in this world where like I just I would love to be an optimist of like glitter and rainbows but rate outside of where you can shop, like on the gen side, rates never go down. I mean, they just, they don't, which is also sort of an argument for competition. At least with competition, everybody's gonna be like, ⁓ I had a high price. Yeah, but then the market dropped and you got a lower price. Okay, that doesn't happen on the distribution side. Transmission is its own unique thing because at some point it's built and then it's maintained and it actually does go down. know we're not seeing that right now because we're in this sort of eight-year build out, but that does happen on the transmission side, which by the way is also a competitive market. even though it's mostly tied to the distribution utilities, which aren't competitive, ⁓ do see a world where maybe if the distribution utilities didn't have to be relied on for everything, ⁓ never had to ask permission to separate yourself from the grid, that might drive them to actually lower costs. Now they're gonna say, no, the more people that leave, we get into this death spiral and everybody has to pay for it. Not so sure that that's true. I mean, on the natural gas side, everybody went for electrification, right? That was the big thing for the last 10 years. Electrify everything. ⁓ the natural gas utilities were sitting there going, ⁓ still have to maintain our system. Their solution was to create higher customer charges. But then there was this pivot and they figured out, hey, I'm going to let the suppliers handle pipelines and supply. I'm only going to handle my distribution grid and in a weird way actually lower to your bill. So less you can control, but because you have that one solid customer charge, you actually pay less. a weird thing. And I ⁓ to do my own little study of it at one point to see you guys know. ⁓ you ever want to know how to game your natural gas system, if you don't have like a natural gas stove, just gas heat, turn it off in the summer and then turn it back on in the winter and then you don't have to pay that monthly charge. Bethany Ruhe: I'm going to start a small series called Teresa hacks hashtag Teresa hacks. Teresa Ringenbach: You I mean... Bethany Ruhe: I love your nerdy little, I mean, my goodness, Theresa, you continue to delight me. Teresa Ringenbach: I'm very, I'm not, I like little mini ways to save money that are easy. Bethany Ruhe: Yeah, well I would argue too, I think that if there was easier access to some of these innovations and technologies that already exist, that that I think would drive some savings too, because there'd be more, the speed to which they can have an impact on you would be, I think, accelerated. Teresa Ringenbach: Yes, yes. mean, imagine a road where your utility came to you and said, hey, ⁓ would you like a wire? And you could say, no, I'm good. I don't need one. I'll handle it myself. Bethany Ruhe: Yeah. Well, the future is unclear, right? We are where we are right now, but I did really enjoy this journey into what the future could look like. I think I know what we need to do, Teresa, to really get this moving. We need to get Taylor Swift involved, okay? If she could start the ball rolling in the Took Down Live Nation and Ticketmaster, imagine what she could do for the electrical grid. you think, hey, Taylor, if you're listening, I'm sure you are. Teresa Ringenbach: It would be amazing. Yeah. Bethany Ruhe: Give us a call, go to our website, fill out a contact us form. We'll be in touch and let's, we can maybe make this happen together. Monopoly buster. That's right, exactly, she could do it all. Well, this was a very enjoyable conversation, Teresa, and for our listeners, we will be at Energy Thought Summit next week, hosting a panel on Tuesday. Teresa will be on the fireside chat Wednesday. If you've never, yes. Teresa Ringenbach: Monopoly buster, musician and monopoly buster. Also talking about utilities innovation because they do. Yes. Bethany Ruhe: Yes, see, so it's gonna be a great conversation. Maybe you could pull some of this conversation out on stage, Teresa. But yeah, if you're at Energy Thought Summit, we're also a sponsor, so make sure you stop by, see us, talk to us. We'd love to chat with you guys there. Maybe even give us some ideas for an upcoming pod. So until then, guys, thank you for joining us. Thank you for listening. Again, I'm Bethany. Teresa Ringenbach: I'm Teresa. Bethany Ruhe: This is not another energy podcast. Make sure you tune in next week because as we all know, energy is never just about energy.