Rent-Seekers of California

Now that I’ve had a chance to catch up with my Google Alerts from the past few weeks, I came across a blog from the Wall Street Journal that piqued my interest. And for once, in a good way. The writer, Steve Blank, lays out the premise that innovation comes slowly in America thanks to the bottleneck created by “individuals or organizations that have succeeded with existing business models and look to the government and regulators as their first line of defense against innovative competition.”

Sure enough, there’s a name for these champions of the status quo, and they even have their own Wikipedia page. They’re called “rent-seekers,” and they can be found everywhere from the automobile industry to the Internet. Rent-seekers stifle research and development and discourage competition by paying for lobbyists to put pressure on elected officials to pass laws that guarantee public backing. In many instances, the same officials received campaign contributions from the rent-seekers themselves.

In California, there is a group that comes to mind instantly when one thinks of rent-seeking industries. I’m speaking, of course, about investor-owned utilities (IOUs), which in many ways are trapped in an age of innocence with regard to our environment that is very quickly coming to an end. Though they may be dipping their toes into the renewable energy future, they’re not jumping into the pool anytime soon. And they’re doing their best to keep startup competition from beating them to it.

The current battle, as I’ve discussed previously in this space, is over net energy metering, the policy that allows consumers with solar power systems to get full retail credit for the energy they put back on the grid. It’s a policy on the books in 43 states, and it saves ratepayers of California’s biggest IOUs—PG&E, Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)—more than $92 million a year, according to a recent study from Crossborder Energy. But that’s $92 million less in IOU profits that could have been used for executive bonuses, new leather chairs for the board room or a nice meal at Morton’s.

With an A-Team of lobbyists and legislators on the offensive against net metering and the startup solar industry, it would seem to be a case of David vs. Goliath. The good news for those of us on the side of sustainability is that David, or Steve Blank, has a game plan for how solar companies can fight back, claim their share of the market, and secure our energy future.

This fight is as much about disruptive politics as it is disruptive technology. The solar industry needs to identify its friends, enemies and the fence-sitters among the 120 members of the state legislature. It needs to find pockets of the market where a significant impact can be made. Then, the solar industry needs to take a page from the IOU’s playbook and fight fire with, well, solar—hire their own lobbyists, form their own political action committees and wage the battle in the court of public opinion.

It would seem that the first stage of the game plan is complete. Studies show that more than two-thirds of new solar installations are occurring in low- and moderate-income communities. This is no longer a luxury item for affluent people in Monte Sereno or Bel Air. Thanks to financing and reduced costs, solar panels are popping up on more and more roofs across California, and the big utilities are taking notice. That’s why they’re coming after net metering.

Now is the time for the solar industry to take the next step: suiting up. And again, at least in California, groups like Californians Against Utilities Stopping solar Energy (CAUSE) and the Alliance for Solar Choice (TASC) are one step ahead of Mr. Blank’s game. These new organization are pushing back on the false claims made by IOUs and their mouthpieces that net metering hurts the consumer and our economy. And they’re exposing dirty little secrets the IOUs would rather we never learned. For more background, check out my columns on the San Onofre Nuclear Generating Station and polling that shows Latino voters supporting solar and other sustainable energy by huge margins.

With more skin in the game, the solar movement may be on the cusp of reaching critical mass and knocking the IOUs down a peg. But it can’t rest on its laurels now. David has awakened a sleeping Goliath, and the battle has just begun.

Peter Allen is a communications consultant, political aficionado, nonprofit board member, musician, and city of San Jose arts commissioner.


  1. I don’t mind consumers getting paid full retail value for the electricity they put back in the grid via their solar panels as long as they paid full retail for those solar panels out of their own pocket. I do have a problem with consumers cashing in on government subsidized solar arrays- that’s unfair to their fellow taxpayers.

  2. > Rent-seekers stifle research and development and discourage competition by paying for lobbyists to put pressure on elected officials to pass laws that guarantee public backing.

    You mean people like . . . Solyndra!!!!

    They got ONE HELL OF A LOT of guaranteed public backing.

    The problem is, solar is really ONE HELL OF A DUMB IDEA!

    No amount of public backing is going to make it sustainable.

    Solar is just a fairy tale for the trust fund children at the Sierra Club to keep them distracted from the REAL ENERGY solutions that are desperately need to provide energy for industries that provide jobs for WORKING PEOPLE!!!!

  3. Let’s be honest here. There’s no more egregious example of “rent-seeking” than that done by the solar industry. Never has there been an industry more hopelessly dependent on intensive lobbying of the legislature. In order to market kilowatts that are twice as expensive as those sold by PG&E, the solar industry’s lobbyists persuaded the legislature to force PG&E and other IOUs to make their non-solar rate payers fund rooftop installations thus propping up otherwise nonviable companies like Verengo and Solar City. And they want this government mandated subsidy to go on in perpetuity- contrary to their claim that their industry just needed a “jump start”.
    Mr. Allen’s resentment of IOU’s executives and shareholders is evident in his writing. And it’s typical among clean energy zealots. One has to wonder if net metering advocacy is really based on a desire for more clean energy? Or is it blind hatred of investor owned utilities ignorantly informed by political correctness.

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