Equitable Adaptation Legal & Policy Toolkit

 

Implementing Equitable Investments in Grid Resilience

Efforts to modernize the grid provide a critical opportunity to integrate new technologies and enhance energy resilience, while also addressing considerations of equity and socioeconomic vulnerability. The high costs of investments in grid resilience are often passed on to ratepayers and must be weighed against the value of future benefits to the public. By explicitly considering and centering equity, utilities and other key players can help to address historic underinvestment, pollution burdens, and the disproportionate climate risk in frontline communities, and can work to minimize or avoid rate increases for lower-income and fixed-income ratepayers. Investments in modern grid technologies, such as advanced microgrids and automated fault isolation and recovery, can substantially decrease climate impacts on society, but investments should also be aimed at minimizing the cost burdens on frontline communities while achieving energy resilience.

Modernization strategies should be designed to support collaboration among all key decisionmaking partners. Strategies should address multiple goals, which can include improving access to low-carbon and resilient energy for all communities, enhancing hard, soft, and natural infrastructure, and embedding principles of equitable, just climate resilience into all levels of decisionmaking. Strategies can be required by utility commissions (see e.g., Electric Program Investment Charge case study) or led by a utility on its own initiative (see e.g., Modernizing the Energy Delivery System for Increased Sustainability case study).

Considerations of Equitable Investments in Grid Resilience

Economic
  • Costs for necessary grid resilience improvements nationwide are significant, so efforts should be considered to prioritize investments and ensure that the benefits and costs are equitably distributed.
  • Increasing grid reliability will help to avoid economic losses from future grid disruptions.
  • In seeking rate recovery for resilience investments, utilities should consider how to preserve affordability for lower-income and fixed-income ratepayers.

Environmental
  • Better integration of local renewable energy sources will reduce carbon emissions and improve air quality.

Social /Equity
  • Rate increases should be equitably distributed and should not increase the energy cost burden for lower-income and fixed-income ratepayers.
  • Grid modernization should seek to enhance household and small business energy efficiency across all income classes so that programs lower energy bills and provide services for households and businesses that need assistance the most.

Administrative
  • Fees, permits, and paperwork can hinder equitable investments in grid resilience.

Legal
  • There is a lack of regulatory standards for rapidly emerging technologies that modernize the grid.
  • Utilities may face mandates from their PUCs to make investments in grid resilience and to allow community stakeholders to intervene in utility proceedings to represent their own interests in rate-setting proceedings (e.g., NYC Participants to the Storm Hardening and Resiliency Collaborative Report).
  • Utilities may face questions about whether rate recovery is an option for helping to pay for investments in grid resilience.

Lessons Learned

  • Active investments in grid resilience are currently a priority amongst many practitioners in the energy systems space as climate change impacts increase for all.
  • With energy being such an essential resource, integrating clean energy and renewables to reduce energy costs and creating new streams of income and tax revenues would be a win-win for all parties involved.
  • Priority investments should be directed to areas facing the greatest socioeconomic risks from outages.
  • Utilities should host diverse, transparent, and inclusive engagement processes and specifically reach out to frontline communities to inform decisionmaking about grid modernization investments and any potential rate increases.
  • Partners should design equity criteria with careful consideration to ensure that the benefits of investments are equitably distributed to address the needs of customers facing the greatest socioeconomic risk to power outages. 

 

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California Public Utilities Commission Clean Energy Research Projects for Low-Income and Disadvantaged Communities

The California Public Utilities Commission’s (CPUC) allocation of its Electric Program Investment Charge (EPIC) to fund projects located in and benefiting low-income and disadvantaged communities is an example of utility commissions participating in equitable grid investment. EPIC funds come from rates charged to electricity customers of the state utilities and support investments in clean energy technologies that benefit ratepayers of investor-owned utilities. AB 523 directs the California Energy Commission (CEC) to expend at least 25% of its EPIC funds for Technology Demonstration and Deployment funding (TD&D) at sites located in, and benefiting “disadvantaged communities,” and adds an additional requirement that the CEC expend at least 10% of its EPIC funds for TD&D at sites located in, and benefiting, low-income communities located in the state. The CPUC approved the allocation of $60 million of its EPIC funding to projects located in and benefiting low-income and disadvantaged communities that are also specifically prioritized for the investment of proceeds from CA’s cap-and-trade program. These investments are aimed at improving public health, quality of life, and economic opportunity in disadvantaged communities, which are defined by AB 523 as those most burdened by pollution from multiple sources and most vulnerable to its effects, considering socioeconomic characteristics and underlying health status.

DC Public Service Commission MEDSIS Initiative, Customer Impact Working Group

The District of Columbia Public Service Commission’s (DCPSC) establishment of the Customer Impact Working Group within the Modernizing the Energy Delivery System for Increased Sustainability (MEDSIS) initiative is a replicable example of how utility commissions are working to invite equitable input in grid modernization efforts. DCPSC initiated the MEDSIS initiative as a means of making the energy delivery system more sustainable, reliable, efficient, cost-effective, and interactive for District customers. DCPSC approved the establishment of six working groups to elicit input from a diverse range of stakeholders in order to address key issues related to modernizing the District’s energy delivery system. The Customer Impact Working Group is examining how grid modernization efforts may impact various customers, including exploring questions of customer equity, data protection and privacy, consumer protection, and low- and limited-income customer inclusion. This Working Group will produce recommendations aimed at ensuring that all customers benefit from grid modernization efforts.

New York City, ConEd Storm Hardening and Resiliency Collaborative

The Storm Hardening and Resiliency Joint Agreement shows how community-based organizations can advocate for investments in grid resilience and ensure that investments are made without significant rate increases for low-income customers. Vulnerabilities and inequities in energy infrastructure were exposed following Superstorm Hurricane Sandy in October 2012, which caused significant impacts to New York City’s (NYC) energy system. To protect customers, the region, and energy systems from future natural disasters, Consolidated Edison, Inc., (ConEd) proposed a $1 billion capital investment for years 2013 through 2016 to mitigate impacts of future extreme weather, protect infrastructure, harden energy system components, and facilitate restoration. The utility organized a “Resiliency Collaborative” process to decide on how funds will be spent in their rate application filing. A collaboration of 12 parties including ConEd, city agency officials, and nonprofit and academic stakeholders resulted in a Joint Agreement between state Public Service Commission (PSC), ConEd, and other collaborative parties that froze electric rates for two years and required $1 billion in investment in storm hardening and resiliency. The multi-year rate plans ensure that delivery rates will not increase until after the rate plans have ended. The plan also offers rate mitigation for customers while assuring continued safe and reliable service. The agreement also provides for the expansion of the Con-Ed low-income discount programs to ConEd’s electric and gas businesses for the benefit of low-income customers.

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