One of the most concrete and tangible changes brought about by widespread adoption of distributed energy resources (DERs) and community solar programs is the significant reduction in monthly energy bills for ratepayers.
When energy bills can take up to 20% of the monthly income for a family at or below 80% of their area’s median income threshold, any reduction at all can make major improvements to that family’s quality of life. The way electricity bills are currently structured, however, has a significant impact on equitable energy access and distribution, and can restrict the impact of these resources.
A common practice instituted by utilities to make back some of the cost incurred by net metering programs, fixed fees can have a disproportionate impact on low-income households, adding an immovable amount to their sometimes oppressive monthly bill.
In addition, Lawrence Berkeley National Laboratory (Berkeley Lab) said that low-income households and households of color are far more likely to report losing home heating service, according to recent federal data.
In Berkley Lab’s most recent report, Advancing Equity in Utility Regulation, the authors argue that utilities, regulators, and stakeholders need to prioritize energy equity in the deployment of clean energy technologies and resources. Within the context of the report, energy equity refers to the fair distribution of the benefits and burdens of energy production and consumption.
The report outlines systemic changes needed to advance equity in electric utility regulation by providing perspectives from four organizations – Portland General Electric, a utility company; the National Consumer Law Center, a consumer advocacy organization; and the Partnership for Southern Equity and the Center for Biological Diversity, social justice and environmental organizations.
Public engagement and “uncommon allies”
In the first part of the report, the Partnership for Southern Equity’s Chandra Farley examines and explains why energy equity is a crucial goal of utility regulation. She examines real-life scenarios of current inequities through a regional lens and provides practical steps toward energy justice.
Farley argues that regulators should extend public engagement in utility regulatory decision making to include environmental justice organizations and provide the capacity for their effective participation through intervenor funding.
She also advocates for the formation and mobilization of coalitions of “uncommon allies,” namely clean energy, civil rights, and equity and environmental justice groups, to inform and educate “first-person advocates” on energy issues and utility decision-making. In this sense, an educated community helps to fight inequities, as communities who aren’t aware of the severity of the energy issues they face are less likely to take action to improve their position.
This idea ties into Farley’s call for prioritize knowledge- and capacity-building on energy equity issues, both for people who may bear the brunt of inequitable outcomes and in statehouses and utility commissions. While communities benefit through being educated on the issues that affect them, it is not solely their responsibility to fight for equity.
Farley’s other recommendations include:
- Expand the meaning of safe, reliable, and reasonable electricity service on the utility side to include equity impacts.
- Enact legislation that protects against service disconnections, eliminates predatory disconnection fees, and funds bill assistance programs like percentage of income payment plans.
- Support utility programs and retail rate design that increase deployment of energy efficiency and other clean distributed resources for energy-burdened households.
- Involve impacted individuals and communities and environmental justice organizations in program design and evaluation and resource planning activities.
- Publicly post shutoff and arrearages data and use it to tailor programmatic solutions.
Reversing the regressive model
In the next section of the report, John Howat and Jenifer Bosco, both of the National Consumer Law Center, use data from the U.S. Energy Information Administration to develop a series of graphs that illustrate historical inequities in the allocation of energy system costs and benefits based on household income, race, and ethnicity. Like Farley, the two continue to make the case for additional consumer protections, which include programs that extend access to energy efficiency, solar, and electrification for disadvantaged households; and improved public participation in regulatory decisions for electric utilities.
In their essay, Howat and Bosco approach tackling the protection of vulnerable populations and the reduction of greenhouse gas emissions on one front, by recommending that utilities guide their investments and services toward solutions that achieve both equity and clean energy imperatives for electricity systems of the future.
The two also lay out a number of ways to reverse the historically regressive model by which electricity costs and benefits are distributed, which include: addressing the proportion of income required to maintain basic electric service; advancing access to on-site energy generation, storage, and energy efficiency technologies—and the bill savings and resilience benefits they can provide; and offering uninterrupted and affordable access to a basic level of electricity service.
Other recommendations in this chapter include:
- Requiring electric service providers to report at a zip code-level the key data points needed to determine the extent to which residential customers are affordably accessing and retaining essential utility service.
- Ensuring that utility affordability programs: serve residential electricity customers who are income eligible to receive federal energy assistance; lower participants’ energy burdens to an affordable level; promote regular, timely payment of utility bills by participants; comprehensively address payment problems associated with participants’ current and past-due bills; are funded through a mechanism that is reliable while providing sufficient resources to serve all income-eligible customers and meet policy objectives over an extended time frame; and are administered efficiently and effectively.
- Reexamining existing utility consumer protections to ensure that vulnerable customers who demonstrate good faith efforts to make affordable utility payments are protected from loss or degradation of service.
- Designing low-income energy efficiency and technology distribution programs to require no up-front payments, result in positive cash flows, and mitigate any financing risks for participants.
Utility perspective
Portland General Electric’s Nidhi Thakar and Jake Wise open by describing “the need to address historic and systemic barriers that have prevented and continue to prevent the progress and participation of historically underrepresented groups, in support of fostering equitable outcomes for all.”
Taking the utility perspective, the two outline how Portland General Electric is working to address three core energy justice principles: procedural justice, distributive justice, and restorative justice, all within the backdrop of regulatory relationships and service to utility customers and communities.
Their arguments are provide in the context of state legislation, responses to the COVID-19 pandemic and wildfires, a new multi-year planning process for utility investments in distribution infrastructure, a community-based smart grid test bed, engagement with community-based organizations and Tribes, and workforce initiatives.
Frequently, discussion regarding energy equity and the adoption of DERs is framed as an “us-vs-them” argument of the customer and advocates fighting against an unmoving, monolithic utility. While utilities across the nation have operated as such, this picture does not define each, and the progress that Portland General Electric has made can be used as a larger model for what is possible.
Other recommendations in this chapter include:
- Approach community engagement, in pursuit of the twin goals of equity and decarbonization, through the lens of environmental justice and in alignment with the Government Alliance on Race and Equity’s Racial Equity Toolkit: listen and communicate, use data, ensure budget, ensure relevancy, and ensure time.
- Provide financial support to community-based organizations to enable their participation in utility proceedings and incorporate recommendations from these organizations in community engagement plans.
- Ensure that all communities the utility serves may benefit from a clean energy future by acknowledging those hardest hit by climate change impacts—and least able to avoid them—and providing access to opportunities.
- Consider distributive justice in utility program design and pricing.
- Acknowledge and seek to repair past harm by working with stakeholders on resilient solutions to climate change impacts.
- Partner with local cities and counties to advance their climate and sustainability action plans, work with community action agencies to deliver energy assistance to utility customers, and support state and federal legislation that assists low-income and vulnerable communities.
Addressing chronic energy injustices
Center for Biological Diversity’s Jean Su concludes the report by laying out the injustices of the current energy system disproportionately experienced by communities of color and low-wealth communities due to fossil fuel pollution and health impacts. These disproportionate hardships include energy burden, energy insecurity, and energy poverty; climate disasters; and ecocide.
Rather than just laying out the host of issues and calling for blanket change, Su then moves to outline legal and regulatory pathways toward addressing chronic energy injustices.
One idea she targets is expand the definition of “public interest” to encompass climate, environmental, and energy justice goals. This would come into play when regulators consider certificates of public convenience and necessity for new energy infrastructure, but could also be used to protect utility customers from undue financial risk, including financial losses from stranded carbon-emitting assets, climate change-induced damages to generating facilities and delivery systems, reputational damage that may drive loss of investors, and access to insurance.
Other recommendations in this chapter include:
- Considering energy burden, energy insecurity, and energy poverty as requisite factors in rate design.
- Prioritizing the deployment of energy efficiency, demand-side management, rooftop and community-owned solar, distributed storage, and microgrids for low-income households and energy-burdened communities.
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Interesting blog, and it’s good to see a blog about energy equity that doesn’t simply demonize distributed generation as the sole source of the problem. In fact the blog points out that distributed generation has the ability to reduce costs for millions of ratepayers, including low-income ratepayers through subsidies and community solar projects. But the utilities are fighting it tooth and nail because they want to retain their current profit levels.
Society needs to make decisions about distributed generation and how it’s benefits are apportioned. Distributed generation has a very large ability to lower cost for all ratepayers if implemented well, but once it rises beyond the current 4% or so in some areas like CA, it will begin to have impacts on the utilities. This is why the utilities are trying to kill it for as long as possible.
The problem is that electricity is zero-sum, and every kWh from distributed generation is a kWh that is not generated by the utilities or other utility-scale generation facilities. Looking into the future, if this trend grows substantially, it would increasingly put the utilities in the role of being more of a grid provider and less of a generator of power, causing a reduction of profits. Currently the utilities want to offset any profit losses due to distributed generation by raising rates and then blaming distributed generation for the higher rates. The alternative option that they don’t like to talk about, however, is that the utilities and utility-scale generators could receive lower profits and the benefits of distributed generation would then be retained by ratepayers (of all income levels if implemented properly).
This is a large looming battle, and it undergirds the growing nationwide fights over rooftop solar. Electricity will remain largely zero-sum. Distributed generation has the ability to reduce costs for electricity users of all stripes, but getting there will cause lower profits for utilities. If we are to have distributed generation, public utility commissions need to start balancing lower utility profits against lower costs to electricity users. It will be a difficult process, and it needs to begin with both sides working toward a reasonable compromise solution.