Low-income individuals can benefit the most from the bill savings from solar energy, yet have the least direct access to distributed solar energy, often at their own economic expense. Distributed solar energy rebates are funded by customers from every income bracket, but are distributed in a regressive manner. In Colorado energy utilities’ retail customers, no matter their income, contribute a small portion of their energy bill to pay for renewable energy. This payment from customers of all income levels funds Colorado utilities’ investments in renewable energy, including both small-scale distributed solar energy and large-scale wind farms. While all customers benefit from renewable energy investment, the historical allocation of utility funding for small-scale, customer-owned solar generation raises environmental and economic justice concerns. This is because the rebates from utilities to financially support distributed, customer-owned solar generation have mostly benefitted higher income households. Nationally, low- and moderate-income households represent 40% of America’s population, but less than 5% of all solar customers. While low-income customers are contributing to the rebates for these solar panels through their bill payments, higher income customers receive the direct financial benefit.
Not only is this unfair and in violation of the principle of proportionality in rate design, it is also important because of the significantly greater impact of solar energy ownership when reducing a low-income customer’s utility bill in comparison with a higher income customer’s energy bill. This is because low-income customers’ pay a disproportionately higher amount of their income on their energy bill, referred to as “energy burden.” Energy burden on the poor is significantly higher. When energy burden is reduced for low-income households, they receive a proportionally greater economic benefit. Money becomes available for other basic necessities such as food and medicine, meaningfully improving quality of life.
In addition to the larger impact on personal low-income household budgets, this economic benefit also translates into comparatively greater social and environmental benefits. The “bang for the buck” for each rebate dollar paid from ratepayer-funded renewable energy for low-income customer solar ownership is more cost-effective because of the greater public policy benefits. In Colorado, the inability to pay energy bills is a primary cause of homelessness for families with children. Lowering energy burden reduces health and safety risks for Colorado families and allows families with children to be more secure in their homes. Utility bills are one of the main reasons people borrow from predatory Payday lenders, exacerbating the cycle of poverty. Low-income communities tend to have disproportionate exposure to pollution from electricity generation with the accompanying greater damage to health, such as respiratory illnesses. Environmental justice is served when solar energy is installed in underserved communities. Equitable access to distributed solar funding is more sustainable because it provides a long-term asset to Colorado’s low-income families that can generate economic benefits for twenty years or more, thus ensuring a much higher return on investment than bill assistance. Furthermore, all ratepayers’ benefit from low-income access to solar because utilities’ costs for bill non-payment, such as bill assistance, bad debt write-offs, and disconnects are reduced.
The Colorado Public Utilities Commission has the opportunity in a forthcoming rule-making proceeding, anticipated to begin in early 2019, to correct this historical inequity in solar energy funding and reap these many public policy benefits. The Commission should also consider the most cost-effective, best practices for low-income customers and communities, such as coordination with energy efficiency programs as well as providing job training opportunities at solar installations. Jurisdictions like California and Washington DC are using solar installations as a vehicle for workforce training for low-income and underserved communities, thus further expanding the public policy benefits of environmentally and economically fair solar policy. Additionally, Colorado’s new governor, Governor Polis has a fresh, valuable opportunity to provide leadership integrating environmental justice into energy policy decisions.
Victoria Mandell (Colorado Law ’88) is a Colorado attorney specializing in energy regulation and data privacy compliance. She is also the President and Chairman of the Board of Directors of GRID Alternatives Colorado, Inc., a regional non-profit installing solar energy for low-income populations.