Our region’s hottest summer days introduce requests from our electric companies to decrease our use. Growing up, I could not understand why such requests would be made. Car dealers never ask us to buy fewer cars. Restaurants never ask us to eat in moderation. Why would electric companies want us to decrease energy use?
Simply put, electric companies as well as water and sewer service providers are heavily regulated by a myriad of laws and regulations. The laws and regulations in this context are designed to ensure that electric service (and other utility service) is always available without rolling blackouts or brownouts, both of which are conditions experienced in the past in places such as California.
As a result, utility providers must have guaranteed access to sufficient utility capacity to essentially guarantee that the supply/service never runs out. Usually, this means that each electric or water supplier, for example, must have access to something like 25 to 50 percent more electricity (or water, respectively) than the utility provider has ever needed at any particular time.
For instance, if an electric company’s customers together have ever used 2,000 megawatts at one time, the law would likely require that electric company to always have access to a larger amount of electricity, perhaps 3,000 megawatts. That reservation of additional capacity is incredibly expensive, especially because electricity generally cannot be stored.
Although some electric companies are privately owned, all electric companies’ rates (and profits for privately owned electric companies) are regulated by the government. Therefore, additional costs, such as the reservation of electricity capacity, is necessarily passed on to all electric customers. Therefore, limiting our electric consumption during the busiest times is a win-win for electric companies and customers.
The mathematical formula for determining how much extra electricity capacity an electric company is legally required to have also incorporates considerations of the maximum electric usage of each individual customer.
For example, if a factory starts all of its machines at 8 a.m. each weekday morning, that startup of machinery (as all of the machines “warm up” at the same time) can create a large surge in electric demand. The legal requirements of how much extra capacity each electric company must have includes hypothetical calculations of each customer also using its maximum usage at the same time.
In other words, the law’s capacity requirements also presume that each factory would someday decide to start all of its machines at 3:00 p.m. on a humid western Ohio summer afternoon. And, again, the need for more capacity means that there is more expense for that particular customer and for all of us as customers.
Notably, there is virtually no “surge” in electricity demand when starting or adjusting the temperatures on our residential air conditioners. Therefore, we can and should keep our homes warmer whenever we are not home.
The laws for electric and other public service provider regulation exemplify the truism for many laws: one motivation for a law (sufficient electricity) can lead to other outcomes (more responsible electric usage overall).
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.