Editor’s note: This is the third piece in a series on what utilities and others are doing to increase equity in the U.S. power system, the challenges they face, and what more consumer advocates say needs to be done.
Innovations to overcome institutional barriers to equity in electricity service are underway at all levels of the power system, advocates for vulnerable consumers said.
At least 10 states now require equity to be part of regulatory decisions regarding the utility investments and rates that are guiding the energy transition, research from the Institute for Market Transformation and E9 Insights found. To be equitable, that transition must address the energy burden, or percent of incomes going to utility bills, that varies starkly with economic disparities, consumer, utility, and power system stakeholders agreed.
The mission “is to move beyond affordability and reliability to ensure all communities benefit,” New York Power Authority Chief Diversity, Equity, and Inclusion Officer Nancy Harvey said. “We want people to get what they need to be their best selves, and we want to build and diversify future energy industry leaders.”
The objective of utility equity programs should be to relieve customers’ heavy energy burdens, but “that doesn't magically happen,” said Chandra Farley, CEO of energy and climate justice consulting firm ReSolve. “The utility business model is ripe for transformation” toward equity and regulators “have a huge role to play because utilities don't make these decisions on their own.”
Through more meaningful community outreach and consumer input, the energy transition can go beyond tiered rate structures and energy efficiency initiatives, advocates and utility representatives said. New voices can show how alternatives like community solar can ease energy burdens and how regulatory decision-making can be more inclusive, some added.
Energy burdens, which according to the Department of Energy average 8.6% nationally for low-income, or LI customers, must be reduced to other customers’ 3%, advocates for said. An LI customer is one near or below the federal poverty level or state or regional median incomes, according to DOE.
In response, electricity providers like the Sacramento Municipal Utility District, are developing “energy burden reduction goals and timelines,” American Public Power Association Senior Director of Member Engagement Tanya DeRivi wrote in November 2021.
SMUD’s effort to reduce high energy burdens “is focused on affordability, equitable access and community engagement for underserved areas,” the utility’s Chief Zero Carbon Officer Lora Anguay said. And SMUD’s workforce and economic development efforts can reduce energy burdens by bringing higher wages to Sacramento, she added.
NYPA sponsors STEM programs, internship programs, college scholarships, small business mentorships, supplier diversity and economic development programs in “underserved communities” added NYPA’s Harvey.
While these efforts demonstrate a spreading national effort to incorporate equity, a just-passed New Mexico bill suggests how granular the energy burden challenge is.
“Everyone deserves a home that is safe, healthy, affordable, and doesn't damage the environment or negatively impact future generations,” Southwest Energy Efficiency Project New Mexico Representative Tammy Fiebelkorn said. “That means equity is different for every single household in every community” and “cookie cutter approaches to energy efficiency rebates won’t work,” she added.
New Mexico’s Community Energy Efficiency Development Block Grant Act, or CEED, will show how local governments and community-based organizations can identify and implement “what is needed, block by block and home by home,” Fiebelkorn said.
New Mexico “is a poor state with an average energy burden of 15%” and does not have LI rates, state Rep. Kristina Ortez, D, said. The CEED’s $10 million in initial funding is “a small fraction” of the estimated $500 million or more that New Mexico needs, “but the work to improve the housing stock can start,” she added.
Another approach to equity could be through better payment plans, said National Consumer Law Center Senior Energy Analyst John Howat. Arrearage management programs forgive one-twelfth of the past due amount for every month a customer pays the current bill, leaving the customer debt-free at the year’s end,” and successful plans assume “struggling customers want to be debt free” and address individual difficulties, he said.
Utility programs targeting energy burdens save customers money, increasing disposable income in “disproportionately impacted black, poor and rural communities,” added ReSolve’s Farley. Workforce training, support for local businesses and deployment of community-based rather than utility-scale resources are examples, she and other advocates, analysts and utility representatives agreed.
Community equity through solar
Community solar projects are owned by a utility or third-party and allot kWs or kWhs to “subscribers” who “receive a credit on their electricity bill for their share of production,” a 2018 National Renewable Energy Laboratory paper on more LI engagement in community solar reported. Subscribers pay through “an upfront payment or an ongoing monthly payment,” it added.
At the end of 2020, there were an estimated 3.2 GW of installed community solar capacity, according to a July 2021 NREL-National Community Solar Partnership study. A goal to take community solar to 20 GW and 5 million subscriptions by 2025 was set in October 2021 by DOE.
But historically underserved communities will require “extra considerations” because only an estimated 1% of LI customers are community solar subscribers, according to a December 2021 APPA report.
Achieving DOE’s level of community solar capacity could bring clean generation and new economic opportunities to energy-burdened communities, SMUD’s Anguay, NYPA’s Harvey, NCLC’s Howat, and ReSolve’s Farley agreed.
But attracting LI subscribers continues to be cost and time consuming, developers and program administrators said. Upfront fees, long commitment requirements, inadequate bill savings, credit rating checks and the need for bills from both the local utility and the project owner have been barriers to entry, they reported.
Community responses vary but, on average, a project MW requires “about 300 households to 400 households,” reported private sector developer Nexamp Director of Community Engagement Juan Para. Nexamp’s “full-service marketing team” uses multiple marketing channels, but “community-based partnerships are what drive our success in the LI community,” he added.
Better practices for lowering costs to attract LI subscribers are emerging, NREL Accelerating Deployment and Decision Support Center Modeling and Analysis Group Manager and lead author of the 2018 and 2021 papers Jenny Heeter said. The market will continue to grow because community solar offers “more equitable solar access” to LI customers without solar suitable roofs or adequate finances for rooftop solar, she added.
The 700 kW for LI customers in Colorado’s Poudre Valley Rural Electric Association 1.5 MW-AC Coyote Ridge project have been 100% subscribed since coming online in 2017, the cooperative’s Energy Resources Specialist Tony Francone said. Developed with GRID Alternatives, a national leader in serving LI communities, it provides LI customers with “an approximate 30% bill savings,” he said.
But the Washington, D.C., Solar for All program stands out for accomplished success, NREL reported. It has reduced the energy burden of “the lowest income households from 13.5% to 8.8%,” NREL said.
Non-compliance payments by electricity providers to meet the District’s renewables mandate have led to revenue that built “about 35 MW of LI community solar,” District of Columbia Department of Energy and Environment Associate Director for Policy and Compliance Ari Gerstman said.
“Some 8,000 LI subscribers now get about $500 per year in free electricity from 3.5 kW allocations at no upfront cost or time commitment, Gertsman said. The credits are integrated directly into their Pepco utility bills in one bill process, he added.
The companion Solar Works D.C. workforce development and placement program requires only high school graduation or a GED, with special attention for those with criminal records, he said. “We have trained 75 solar technicians per year and, with 2021 federal COVID recovery act funding, that will increase to 150 per year for the next three years and include electrician training,” he added.
Recent utility announcements suggest their brand recognition may allow easier LI subscriber recruitment, according to Smart Electric Power Alliance Community Solar Working Group Staff Lead Rusty Haynes.
The 1,490 MW first phase of Florida Power and Light’s SolarTogether community solar program includes 37.5 MW for LI customers and is reportedly totally subscribed, Haynes said. A planned next phase doubling SolarTogether’s total size could bring the LI portion to 82.5 MW, representing roughly 16,500 customers, by 2025, he added.
Duke Energy Florida’s Clean Energy Connection will total 750 MW, including 26 MW for LI subscribers, Duke announced June 10. LI subscribers will receive a “fixed monthly $9.03 credit per kW” which “will always be higher than the fixed monthly $8.35 subscription fee per kW,” and provide about $42 per year in bill savings to LI customers, it added.
LI customer provisions are determined in state community solar laws, but other new approaches to address energy burdens must come through still inadequate state and federal regulatory processes, advocates for regulatory reform said.
Traditional regulation has failed to address worsening energy burdens or introduce the diverse voices now clamoring for equity, federal and state regulators and regulatory analysts have acknowledged.
State public utilities commission processes are not inclusive and too slow-moving to meet the urgencies of the climate crisis and the evolving stakeholder landscape, a July 2022 RMI paper on regulatory innovation to achieve equity said.
To improve, commissions can “define and share goals for proceedings early in the process,” and meaningfully engage or collaborate with non-utility stakeholders, the paper recommended. They can also provide more transparent access to “data needed to understand utility performance” and “initiate new processes” that accelerate equitable power system decarbonization, it added.
Broader methods for public participation can help regulators and stakeholders “learn from each other,” RMI Manager, Carbon Free Energy, and paper co-author Cory Felder said. “A well-designed regulatory sandbox could increase equity by encouraging utility-third party collaboration and creating a way to test and scale innovative solutions more quickly,” Felder added.
Socioeconomic diversity can require regulatory decisions on a broader set of perspectives, but “bringing the public into the decision-making process can help increase confidence in the outcome,” added RMI Senior Associate, Carbon Free Energy, and paper co-author Jessie Ciulla. “Presentations or technical primers could help balance competing interests and support stakeholder decision-making,” she said.
Oregon’s distribution system planning proceeding, opened in 2019, “is an example of a traditional regulatory process where the commission has centered equity,” Ciulla added. “Along with requiring utilities to optimize DSP efficiency and maximize benefits to customers, it requires greater procedural equity and stakeholder opportunities to impact decisions,” she said.
A workshop on a staff DSP whitepaper introduced the proceeding and answered stakeholder questions, the RMI paper reported. Transparency on the phased proceeding’s timeline, goals, and objectives, and responsiveness to stakeholder input and needs was established early and has continued, and a public website allows ready access to all workshops and proceedings, the paper added.
But the time and cost for participation in expanded processes can pose a barrier for some LI customer advocates, and at least 16 states now have varying forms of intervener funding, Felder said.
Intervener support is a significant part of an equity effort announced by the Federal Energy Regulatory Commission in June 2021. FERC’s Office of Public Participation is to advance efforts to improve outreach, public education, and technical assistance, the June 2021 FERC report to OPP said.
The objective is compensation and technical guidance to “communities that have been historically underrepresented,” to put them “on equal footing with well-resourced industry stakeholders,” the report added. The OPP website now offers guidance on how to intervene, “primers” on energy markets and reliability, and “explainers” on electric transmission proceedings and energy projects.
Electricity regulation “has been an industry-driven conversation and not a community driven conversation,” New Mexico Rep. Ortez said. “Regulators should hear from people like me, progressive legislators who represent communities of color.”
The “same old white guys in gray suits still make too many regulatory decisions that impact those not in the room and without funding and technical expertise to participate,” NCLC’s Howat agreed. “We need an army of new intervener-advocates with the trainings, workshops and resources to effectively represent their communities,” he added.