In the midst of a natural gas shortage, steadily increasing oil prices, and rising prices for the costs of constructing new electrical generating stations, Americans received one bit of good news: a study for the Energy Research and Development Administration finds that solar heating is competitive with other energy sources in many parts of the United States.¹ One sector of the business community may not have greeted this news with enthusiasm. Public utilities, which currently provide a substantial portion of the energy used to heat buildings, could lose some potential customers if solar-powered heating systems become widespread. Although it is highly unlikely that solar energy use could grow quickly enough to reduce the demand on existing powerplants,² it would undoubtedly shrink future needs.

Moreover, building owners who use solar-generated electricity as a backup source of energy could cost utilities far more to serve than other residential customers. The solar user may need backup service only infrequently, after extended periods of extreme temperatures or cloudiness. If the timing of this need coincides with the peak demand on the utility, extra generating capacity will be necessary to provide this occasional service. The issue must be determined for each utility as the time of the peak and the need for backup service will vary substantially among utilities.³ Since even idle capacity must be paid for, the costs of serving the occasional user may be higher than those for a customer who uses the same amount of electricity, but has a steady demand. Although the battle has hardly begun, one utility has already tried to retaliate by imposing a rate structure that reflects the potentially higher costs of serving solar customers.⁴