I think the detail your missing is that it's not that utilities are worried about people going off grid.

I don't need 20Kw of instantaneous power generation, I need 20Kw of instantaneous power available to me for a very short period of time, and I need to generate 12Mwh per year to cover my total needs (including my electric car BTW). When I'm not using all my power, it goes on the grid for someone else to use.

Today, the utilities keep my lights on by generating enough power to make up for the fact that distributed generation is not producing enough at night or on cloudy days to meet the peak demand, but what happens when we have more distributed generation as well as distributed storage?

The answer is the utility still exists, but it makes its money by servicing it's line and providing a market, not by generating itself.