Going Off The Grid Is Hurting Energy Utilities

While utility investments tend to be relatively stable, experts are warning that the U.S. push to ‘go green’ is creating a problem for electric companies whose costs to maintain their comprehensive networks are not being covered.

As Americans move toward energy-efficient appliances and alternative energy sources, their electric bills are sinking— which has left utility companies to think outside the box in order to fund their operations.

Off The Grid

Solar panels, what many saw as a passing fad, have become a booming trend for U.S. individuals and businesses. Home installations for solar power have risen by 400 percent in the U.S., while panel installation for businesses rose by 300 percent.

The increased popularity can be attributed to declining prices as well as improving technology, which have made solar power comparable to the service provided by utilities. As more and more homes begin to make their own energy and ‘go off the grid,' many are expecting to see electric utilities start to waver.

Utilities Step Up

While some see the push towards renewable energy as the beginning of the end for steady-growth utility stocks, some companies are working to change their business models in order to keep up with the trend.

Madison Gas & Electric Co. pushed to increase its fixed monthly fee and reduce the price of per kilowatt-hour electricity in order to compensate for lower usage.

Net Neutrality Has Some Unlikely Backers

However, Madison’s rising fixed costs for consumers could provide further incentive for homeowners to move completely off the grid, as the new rates penalize those who use less energy.

NRG Energy Inc. NRG is taking a different approach by encouraging the use of renewable energy by selling solar panels and energy-producing appliances directly to its customers.

Last year, NRG acquired Goal Zero, a low cost solar unit producer, in order to offer affordable alternative energy to its electric customers. Pinnacle West Capital Corp’s PNW Arizona Public Service Co. is similarly embracing shift to solar power by introducing a new solar-power program for some of its financially strapped customers.<?p>

The company offers a $30 per month credit on customers’ electric bills for 20 years in exchange for the rental of their rooftop. The company then installs solar panels on the customer’s rooftop free of charge.