Entrenched industries have never liked the “sharing economy”.
Solar leasing company Sunrun has faced more hurdles than most from big utilities.
Entrenched industries are working tirelessly to save you from the new products and services you want. As established companies stifle innovation in industries as diverse as energy, housing, and transportation, entrepreneurs are increasingly finding themselves fighting not only to win customers, but also the hearts and minds of the very legislators and regulators whose campaigns have often been funded by…you guessed it, the established companies.
In 2007, I co-founded Sunrun to tackle one such engrained industry: electric energy. We developed a way for families to get rooftop solar power without incurring upfront costs or having to understand solar technology. We choose the equipment, foot the installation cost, and charge monthly for the power these systems generate, as a utility might. In 11 states, the average Sunrun family typically pays us 15% less than they used to pay their monopoly utility.
Utilities don’t like this. Since co-founding Sunrun six years ago, we’ve had box seats to stunningly brazen attempts by utilities to squash our business. And the rooftop solar industry is not alone in these battles. Like Sunrun, many innovative and creative business models emerged from the economic recession to shape a multi-billion dollar “sharing economy” characterized by what we at Sunrun call “disownership.” Companies like hotel alternative Airbnb, taxi alternative Uber, and car ownership alternative RelayRides, are just a few–and they face similar attacks.
But how far will companies go to protect their franchises from open market competition? Further than I ever thought imaginable.
UTILITIES THROW DOWN
An early eye opener came in 2010, when Pacific Gas & Eclectic (PG&E) sunk $30 million dollars into a ballot initiative that would have changed the California state constitution, effectively restricting competition from municipal power programs, such as San Francisco’s community choice aggregation program.
More recently, California utilities have tried turning consumers off to solar by framing it as a race issue. Despite the fact that two-thirds of California home solar installations now occur in low and median income neighborhoods, utilities walk the halls of Sacramento pointing to decade-old data suggesting solar is only for the rich.
Arturo Carmona, Executive Director of Presente.org, said in August of this year, “The utilities are trying to get Latino leaders to support efforts to obstruct California’s rooftop solar growth. California Latino voters support rooftop solar by wide margins. Latino leaders in the state legislature should listen to Latino voters instead of siding with the big utilities.” Presente.org is a national organization whose mission is to amplify the political voice of Latino communities.
Most utilities hold a monopoly on how people get electricity. Unlike normal companies, regulated utilities are allowed to set rates as high as is necessary to earn a guaranteed profit on the infrastructure they build (transmission lines, power plants, etc.), no matter the cost or reliability. Utilities have become so good at arguing for this profit that even in today’s low interest rate environment, their guaranteed return is typically 10% or more. The theory behind the guarantee is that utilities need to attract billions of dollars to maintain the grid. At the same time, banks today have access to nearly unlimited capital despite typically earning lower returns, which are notoriously not guaranteed. Why should public utilities have it better than Wall Street banks?
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