In this article, we will cover:

• What is energy equity / justice?
• Why is it important to utilities, what type of policies exist and which utilities are already actioning?
• What are the critical elements that individual utilities need to prepare for to respond to federal and local legislature?
• How do utilities create an effective energy equity program and framework and how should they monitor and report?

What is energy equity / justice?

Energy equity / justice is the concept that everyone, especially those who have been underserved, should have access to clean, affordable, and reliable energy. The Department of Energy (DOE) and Utility Regulators prioritize energy equity and environmental justice to improve the health, safety, and energy resilience of communities that have been disproportionately underserved, by ensuring all Americans have access to affordable clean energy.

The department of Energy Efficiency and Renewable Energy (EERE) defines the terms “Energy Equity” and “Energy Justice” interchangeable, others put equity under the broader umbrella of justice. In this article we use the two terms interchangeably. EERE has the stated goal of:

“By advancing equity across the Federal Government, we can create opportunities for the improvement of communities that have been historically underserved, which benefits everyone.”

Per EERE, energy equity recognizes that disadvantaged communities have been historically marginalized and overburdened by pollution, underinvestment in clean energy infrastructure, and lack of access to energy efficient housing and transportation.

Some examples to help understanding:

1. You need to own a home before you can install solar and receive government subsidizes. However, the cost to run the grid remains even or increases which means the price per capita for those not running solar increases
2. Analogous to solar, it’s a similar demographic that are buying expensive EV’s at reduced subsidized pricing – and therefore when planning EV charging stations locations, lower income areas are typically not targeted – Since 2006, the top 20% income earners in the United States received 90% of electric vehicle income credits (Source: EERE)
3. On a utility scale, prior investment decisions on improving the network assets come from a cost / benefit analysis that doesn’t incorporate equity, again often leveraging government subsidies but not supporting the disadvantaged

4. Less than half of U.S. community solar projects include low-income household (Source: EERE)
5. Energy burden is the percent of a household’s median annual income that is used to pay for electricity and gas bills. Households with a high energy burden pay more than 6 percent of their income on energy bills; those with a severe energy burden pay more than 10 percent (source: nrdc.org). According to DOE’s Low-Income Energy Affordability Data (LEAD) Tool the national average energy burden for low-income households is 8.6%, almost three times higher than for non-low-income households which is estimated at 3%

Why is it important to utilities, what policies exist and which utilities are already actioning?

Utilities care about energy equity because both the government and regulators are increasingly driving this issue and many states have enacted legislation over the last couple of years to more explicitly require utility regulators to consider equity.

Energy equity is important to American utilities for several reasons and given the predominant monopoly model, will lead to new avenues that may benefit the utility overall as well as historically underserved customers:

1. Reduced Financial Risk and New Savings / Performance Opportunities: By ensuring that energy is affordable and accessible to all, utilities can maintain a broad and diverse customer base, which can lead to more stable revenue streams and improve Regulatory performance (gain incentives / reduce penalties).
2. Improved Reputation: Utilities that prioritize energy equity can improve their reputation among customers and stakeholders, which enhances customer loyalty, attracts new developers, reduces customers desire to leave, and fosters positive relationships with regulators and policymakers.
3. Regulatory Compliance: Equity helps utilities meet regulatory mandates. Many states are increasingly recognizing equity as an important goal and are requiring utilities to consider equity in their operations.
4. Addressing Historical Injustices: Energy equity confronts the suffering faced by disadvantaged groups in terms of access to energy. This includes addressing the unequal distribution of energy system costs, which often disproportionately impact minority communities and immigrant groups. By doing so it will improve relations across the board with these groups, engendering more good will.
5. Promoting Energy Justice & Accessing Funding: Energy justice involves investing in communities, acknowledging structural injustices, and empowering disadvantaged communities. Utilities can use an energy justice framework to assess their actions and decisions and realize the benefits of energy equity for their constituents. As well as broadening engagement, collecting better data, and executing research to improve participation in clean energy, EERE are providing funding opportunities to enable more diverse participants
6. Supporting the Clean Energy Transition: As the energy sector transitions from fossil fuels to renewable energy sources, it’s crucial to ensure that disadvantaged communities are not left behind. Energy equity can help ensure that these communities can step into positions of leadership and ownership in the clean energy transition.[LR-T1] 

Additionally, Energy Equity can lead to new energy-efficiency opportunities such as improving older buildings in underserved communities, reducing arrears, consideration for ancillary Non-Energy Benefits (NEBs), along with the improved reputation and meeting mandates. NEB is interesting, in that they include the utility, customers and society at large and can be incorporated into an overall set of benefits. The Midwest Energy Efficiency Alliance NEBs factsheet provides a good overview of example benefits:

Figure: Non-Energy Benefits (source: https://www.mwalliance.org/sites/default/files/media/NEBs-Factsheet_0.pdf)

Several states, including Illinois, New York, New Jersey, Massachusetts, Maine, California, Oregon, and Washington, have enacted legislation over the last couple of years to more explicitly require utility regulators to consider equity, with each state determining its own approach towards energy equity policy and each utility responding based on their unique situation.

Some examples where utilities are already taking action include:

• SMUD in California have numerous programs underway to increase job creation, solar installation and EV infrastructure and energy efficient home goods all targeted at historically underserved communities
• Many firms are making it easier to access both low income and Energy Efficiency programs, including PSE, Eugene Water and Electric Board, Seattle Public Utilities and SCL, with the latter also incorporating feedback from its Race and Social Justice program into its electrification of transportation
• SCE has an Equity Resilience Eligibility Matrix that provides an incentive for low-income to install and use solar+ systems
• Con Ed and Xcel provide increased incentives for Electric Vehicle (EV) charging stations
• Hawaii Energy, National Grid, Con Ed, PSEG, Ameren, ComEd, RMP, Consumers Energy, and DTE Energy all track energy equity metrics in their Demand Side Management (DSM) portfolios and receive performance incentives from the state when achieved (as of 2018 – 29 states had incentive programs – simplistically DSM programs allow utilities limited control of customers energy systems to reduce usage for brief periods to avoid having to “turn on” additional generation)

The American Council for an Energy Efficiency Economy (ACEEE) adapted this approach to achieving overall Energy Equity:

Figure: Energy Equity Infographic from ACEEE – https://www.aceee.org/topic/energy-equity

What are the critical elements that individual utilities need to prepare for to respond to federal and local legislature?

Energy equity is fast becoming a critical aspect of modern utility regulation and legislation. Per this article, utilities are applying equity across the organization, from distribution planning to marketing and public affairs, to energy efficiency and the electrification of transportation and even in who they use as suppliers. As they start these programs, utilities are beginning to learn much more about their customers challenges and incorporating equity into their decision making and programs.

So what should your utility be doing to either prepare for or actively participate in Energy Equity and respond to federal and local legislature on Energy Equity:

1. Prioritize Energy Equity: Utilities, regulators, and stakeholders need to prioritize energy equity in the deployment of clean energy technologies and resources. Equity in this context is the fair distribution of the benefits and burdens of energy production and consumption. Each utility needs to understand what Energy Equity mandates it has  committed to and ensure it has a plan to delivery against those.
2. Consider the Impact on Low-Income Households: The structure of electricity bills can have a significant impact on equitable energy access and distribution. For example, fixed fees can disproportionately impact low-income households.
3. Incorporate Equity in Decision-Making: Several states, including Illinois, Maine, Oregon, and Washington, have enacted legislation over the last couple of years to more explicitly require utility regulators to consider equity.
4. Promote Transparency and Accountability: By intertwining transparency and accountability into their frameworks, utilities can make significant strides towards fostering equity and energy justice in their operations and initiatives.
5. Engage with the Community: Community engagement can amplify and support community visions, contributing to energy equity. Utilities can dramatically improve their perception in disadvantaged areas by providing utility level support in things like the electrification of transport, access to subsidized energy efficiency and ease of access of low-income funding programs.
6. Collaborate with Various Organizations: Collaboration with consumer advocacy organizations, social justice, and environmental organizations can help advance equity in electric utility regulation.

Energy equity and decarbonization and goals can and need to go hand-in-hand. The infrastructure investments that utility companies make today, and regulator decisions about what goes into electricity bills, will have significant impacts for decades to come.

How do utilities create an effective energy equity program and framework and how should they monitor and report?

To achieve these goals, utilities need to develop a broad energy equity program and framework with effective metrics that allow the program to be monitored and continuously improved. Given Energy Equity impacts so many departments, the program needs to be owned and managed at the executive level, with enough influence to ensure the active participation of those impacted, both internal and external. Programs may include teams from DSM including Energy Efficiency, DER (Distributed Energy Resource e.g. solar + battery), Transportation Electrification, Low income Funds and Customer Assistance.

Glen Oak Consulting has developed the following approach to support utilities as they initiate their EE journey.

Figure: Glen Oak Consulting approach to creating and improving an Energy Equity program / framework

The approach has several benefits:

• It defines the objective and builds executive consensus from the outset, setting boundaries and expected benefits for both the utility and impacted communities, grounded in existing Regulatory agreements – this sets up a win-win approach
• Provides an objective and equitable framework for which to make decisions
• Allows flexibility for growth and change, engaging impacted stakeholders and incorporating their feedback to ensure all efforts are aligned, impactful, achievable and agreed
• Monitors and evaluates program impacts to ensure outcomes are on target or that a course direction is implemented at earliest point, eliminating waste from the program  

It is critical that internal agreement on boundaries, expected outcomes and costs are defined ahead of engaging with external parties. This will set the rules and establish what is possible, rather than committing to a plan or actions that are not achievable. This builds credibility with the external stakeholders and dramatically improves the likelihood of program success.

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Some examples of energy equity policies and briefings include:

1. The World Resources Institute has developed a briefing entitled “Addressing Energy Equity in the United States”. This policy considers how targeted investment and other spending and policy considerations can direct and retain benefits of clean energy for households and communities that, historically and currently, have not benefited equitably from the energy system. It suggests that targeted federal investment—including direct payments, grants, loans, loan guarantees, and technical assistance and training—could advance equitable access to clean energy and its social, health, environmental, and financial benefits.
2. The American Council for an Energy-Efficient Economy (ACEEE), a nonprofit research organization that develops transformative policies to reduce energy waste and combat climate change, defines equity in energy efficiency as policies and programs that are informed by the community’s input and designed to meet the needs of all individuals. It suggests that decision-makers, including those working in utilities, regulatory bodies, and governments, can help address energy disparities for low-income households, renters, and other marginalized households through well-designed energy efficiency programs and policies.
3. Justice40 Initiative by Department of Energy: This initiative aims to increase parity in clean energy technology access and adoption, access to low-cost capital, clean energy enterprise creation and contracting, clean energy jobs, job pipeline, and job training for individuals from Disadvantaged Communities (DACs), and energy resiliency in DACs.
4. Energy Efficiency Policies and Programs by Department of Energy: These polices promotes energy efficiency programs and policies for public facilities, equipment, and government operations through energy data management and evaluation, energy efficiency building standards for public buildings, retrofit programs for existing public buildings, procuring energy-efficient appliances and equipment (including vehicles), and establishing energy efficiency operations and maintenance procedures.
5. The UN’s Energy Policies for Sustainable Development: Various policy targeted at making markets work better by reducing price distortions, encouraging competition, and removing barriers to energy efficiency.
6. The report “Advancing Equity in Utility Regulation” published by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) provides perspectives on advancing equity in electric utility regulation.

This article includes insight and derivations from these sources:

igi-global.com, oilprice.com, www.aceee.org/topic/energy-equity, www.wri.org,  www. energy.gov,  https://emp.lbl.gov, https://www.un.org/sustainabledevelopment/energy/, www.esource.com, https://www.energy.gov/justice/justice40-initiative, newscenter.lbl.gov , blog.ucsusa.org

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