Join us for a discussion on this topic of equitable electrification on October 28.
Electrifying everything is increasingly viewed as one of our best strategies for decarbonizing our societies and solving the threat of climate change. But as we start to switch all the appliances and vehicles in our lives to efficiently run on clean electricity we need to do so carefully. Electrification must benefit everyone, not just those who can afford new heat pump water heaters and electric cars. It should not burden disadvantaged communities, who can’t easily fuel switch, with the aging natural gas and oil infrastructure costs as everyone else leaves these dirty systems behind.
To this end, we’d like to explore strategies for electrifying equitably and profile some of the ideas and people leading this charge. In this article, we’ll focus on how to reduce the utility bills for disadvantaged communities by interviewing someone who is trying to do exactly that.
Oriana Magnera is an Energy and Climate Policy Coordinator for a community-based organization, Verde, in Portland, Oregon, that serves communities by building environmental wealth through Social Enterprise, Outreach and Advocacy. Amongst many other things, Oriana is working to make electricity rates more affordable for lower income households.
Oriana, why is it important to have people who have fewer financial resources pay less in utility costs?
Oriana Magnera: There are a couple of reasons why. First, we believe that it’s a matter of equity and justice, people with fewer resources should pay less for energy. At Verde, we believe that energy is fundamentally a human right and people should have uninterrupted access to it, full stop.
Reducing utility bills for those with fewer resources is a good example of “targeted universalism” where we take a universal goal (everyone has access to energy) and create targeted strategies to achieve it (lowering bills for those who have the hardest time affording it).
Another reason we believe in reducing utility bills for environmental justice communities (Black, Indigenous, and other communities of color, communities with lower incomes, and rural or coastal communities) is that it helps the whole community not just those with the lowered costs. When those with fewer resources get a discount on their energy costs, it reduces the number of people behind on their utility bills, and all the costs associated with recovering these back payments. And when folks don’t have to make a decision between paying for food and utility bills they can put more money into the community, investing in local businesses and creating a positive feedback loop.
Tell us about your efforts to pass a bill that does this in Oregon
Oriana: Verde has worked in coalition for the last two years to pass a bill that allows for differentiated rates (where people who earn less pay less for utilities) to address energy burden in our state of Oregon. This is standard practice in many states across the nation, including our neighboring states Washington and California.
Our coalition has also included labor, housing organizations, other environmental organizations, and utilities have also been at the table. This really speaks to the universal nature of this cause because if utilities are willing to come to the table, that means they know it’s the right thing to do and they know that lowering costs for the people who need it will have benefits for the energy system as a whole.
The past two years we’ve gotten very close both times to passing the bill but it’s unfortunately gotten caught up in the end of session fracass that has occurred especially related to anything climate change. We were two days away from passing in February 2020 on the senate floor, we knew we had the votes, and then the session just ended (the Republicans walked out), so we weren’t able to move forward and that was deeply disappointing. It’s more disappointing when we look at what’s happened in the months since, because there are many more people who are in arrearages right now (behind on their bills) and can’t afford their energy bills.
As more and more people lose their jobs due to COVID, as work dissolves and people are spending more time at home, their energy bills are going up. We’re in this kind of perfect storm where it would be desperately important to be able to allow utilities to use reduced rates to redistribute that cost onto the people who can afford it and away from the people who are most impacted. COVID is really laying bare the inequities in our systems, a pain people have been feeling for years and years and is now at the surface and has crystallized.
What other sectors already get reduced electricity costs?
Oriana: We talk a lot about cost shifts for things that are new but we don’t talk about the cost shifts that already exist in our energy system. Not every rate class pays the same rate. In particular, our industrial rate payers pay the lowest costs for electricity of anyone. They negotiated these low costs because they use the most energy. From our perspective, that’s probably not the most fair and equitable way to approach things, especially because many industrial entities are big corporations and many others simply have more means to afford energy costs. Part of what we’re trying to do is say that in our current system there is already a cost shift (industrial users pay less, everyone else pays more) and it’s borne most by the people who can least afford it (low income users who don’t get a discount on their rates). We’d like to adjust this structure so that those people making less are able to afford their utility bills.
I think where things get a little bit challenging is how you define the folks who can get a reduced utility rate versus people who miss an income cutoff. One way around that is to not do an income cutoff at all but allow people to self certify. This assumes that people are honest, have good intentions and also understand what their needs are and so someone who misses an income cutoff that has medical expenses or other bills that effectively make them more poor than they would appear to an income screening could still get reduced utility bills. Providing more flexibility in qualifications for relief on utility bills is a really important way to ensure that all the people who are in need can benefit. The argument against that is that people would take advantage of this but I think you have to assume that people are good and honest and recognize what their needs are and trust people to advocate for them and receive support if they need it. The bottom line from Verde’s perspective is that we would recommend that we look to other rate payer classes like industrial users to bear the cost and not redistribute just to residential ratepayers.
Would having different utility rate classes help our larger society electrify equitably?
Oriana: Having the ability to protect ratepayers with lower incomes or less means, is beneficial because one of the arguments that utilities use most often for not doing similar things to electrification, like community solar for example, is that they say “oh it’s going to cost shift and it’s going to hurt low income rate payers.” We can avoid that argument and insulate against it by saying “well no we already have a mechanism where anybody who has lower income will be opted out of any rate increases.’”
So it gives us an important political tool as advocates but it also creates more flexibility in our energy system as a whole because we have a new tool for designing the rates that people pay for energy. And it’s a tool that can be a model for other tools like electrification and community solar that help us to achieve our climate and equity goals.
After talking with Oriana, I’m convinced that those of us who believe we need to electrify everything must first make sure that together we’ve lowered energy costs for those with fewer resources. Once that’s done and we’ve created rate classes where people with lower incomes pay less in utility bills, we can switch to powering our lives on clean electricity without burdening those that can least can’t afford it. How is the situation in your state and community? Do people with lower incomes pay less for utilities? Let us know in the chat below.
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