APS: The Ultimate ‘Rent-Seeker’

Solar Style July 2, 2013 0


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The list of characteristics rings very familiar: anti-innovation, status quo, fearful of challenges from disruptive business models, look to the government and regulators as their first line of defense against innovative competition, and hire lawyers and lobbyists to influence politicians and regulators to pass laws, and write regulations.

Who might this be? Why it’s Arizona Public Service of course.

The Wall Street Journal lays this out in crystal clear terms in a recent article headlined, “Strangling Innovation — When Rent-Seekers and Startups Collide.”

It details how innovators can fight the challenges brought by lovers of the status quo, which of course includes monopolies like APS. The challenge is the success of rooftop solar.

The Journal calls companies like APS and its ilk “rent-seekers,” or, “organizations that have lost the ability to innovate.” The Journal says rent-seekers look to the government to provide their defense against innovation.

Look at how the Journal describes rent-seekers and see the parallel to the Arizona’s monopoly utility:

“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. They use government regulation and lawsuits to keep out new entrants with more innovative business models. They use every argument from public safety to lack of quality or loss of jobs to lobby against the new entrants.  Rent-seekers spend money to increase their share of an existing market instead of creating new products or markets. The key idea is that rent-seeking behavior creates nothing of value.”

“These barriers to new innovative entrants are called economic rent. Examples of economic rent include state automobile franchise laws, taxi medallion laws, limits on charter schools, auto, steel or sugar tariffs, patent trolls, bribery of government officials, corruption and regulatory capture. They’re all part of the same pattern — they add no value to the economy and prevent innovation from reaching the consumer.”

Rooftop solar consumers in Arizona have demonstrated that solar has the potential to be extremely popular and its popularity is a threat to the future of APS because of net metering. That’s why APS is trying to end net metering and basically Arizona solar. The Arizona Corporation Commission will ultimately decide between APS and the future of solar.

The Journal gives examples of startups challenging the status quo, like what the solar industry is doing in Arizona and across the country: “LyftUberAirbnbSpaceXZillowLegalZoom, food trucks, charter schools, and massively open online courses. Past examples of startups that succeeded in redefining current industries include Craigslist, Netflix, Amazon, Ebay and Paypal.

An article like this brings into sharp relief the dynamics of the battle for solar’s future in Arizona. It’s hard to see why anyone wouldn’t want to be in the side of Amazon, Ebay and Craigslist in that battle.

Read the full article here: http://blogs.wsj.com/accelerators/2013/06/21/weekend-read-strangling-innovation-when-rent-seekers-and-startups-collide/








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