SMUD

SMUD’s Heatmap: Providing the Intel to Make Clean Energy Accessible for Low Income Customers

As a utility customer, transitioning to clean energy sources can seem like a daunting task, especially for people who are financially strapped.  For that reason, there is a growing divide between the amount of high-income and low-income customers using clean energy.  

Many people, even those with higher incomes, grapple with its affordability and accessibility.  After all, not all of us have the income to purchase a Tesla or our own solar-powered, decentralized power generator.  Many people do not even have access to the basics of sustainable living. To that point, 11.3% of the U.S. population is considered impoverished. With a March 2021 total population of 332,354,205, this means that 37 ½ million people are living at or below the poverty level. 

According to the Yale School of the Environment, “In many low-income neighborhoods, upgrading to energy-efficient lightbulbs costs more than twice what it does in higher-income areas.”  The statistic is based on research done in Detroit, but there could be other similar disparities yet to be discovered across the U.S.

If we genuinely want to reach the clean energy future, clean energy opportunities must become affordable and accessible for all utility customers, including those in low-income communities

Nature and Magnitude of the Divide 

Making the switch to clean energy isn’t likely when people are just trying to keep up with the rising cost of energy, all while struggling to put food on the table.  To this point, a recent report from U.S. Energy Information Administration’s Residential Energy Consumption Survey (RECS) states, “About one in five households reported reducing or forgoing basic necessities like food and medicine to pay an energy bill, and 14% reported receiving a disconnection notice for energy service.”  These numbers are gut-wrenching.

For low-income customers, reducing energy bill costs is a higher priority than switching to clean energy. This will remain our reality until clean energy options are as affordable, if not more affordable, than their carbon-producing counterparts.

Determining Who Needs What through SMUD’s Heatmap 

There are a lot of new and emerging options when it comes to providing low-income housing with clean energy options, but it’s a matter of determining who needs what. 

SMUD, a community-owned utility serving 1.5 million residents in Sacramento County, undertook the complicated task of redesigning its low-income assistance program, known as the Energy Assistance Program Rate (EAPR). Pilot programs associated with SMUD’s redesign provided home retrofits, energy efficiency products, and weatherization to more than 22,000 households from 2017 to 2020. These measures helped SMUD’s most vulnerable customers save energy and money over the long term. EAPR customers with a household income between 100 and 200 percent of the Federal Poverty Level now receive the largest monthly discounts on their electric bills.

SMUD’s revamped EAPR program received the 2018 Resource Efficiency & Community Service Award from the California Municipal Utilities Association (CMUA). 

Building on its low-income assistance programs, SMUD took additional steps to support its most vulnerable customers, including the development of a Sustainable Communities Resource Map which shows areas with diverse needs.  SMUD’s map investigates more than just environmental factors.  It considers socioeconomic elements such as poverty, access to medical care, social vulnerability, and more.  The company’s stated goal, as it relates to the map, is to “create and support healthy, vibrant and economically sustainable neighborhoods.”

There are a lot of new and emerging options when it comes to providing low-income housing with clean energy options, but it’s a matter of determining who needs what. 

Before any plans can be implemented, low-income areas need to be reformed to support people’s well-being, comfort, and happiness.  For example, on the SMUD heat map, one of the areas was identified as being an “opportunity zone.”  What this represents is an economically-distressed community where there are tax incentives for investing in “environmental justice, sustainability, climate change, and affordable housing.” 

Another sector of the heat map that stood out is “promise zones.”  The focus of these zones is to achieve a better quality of life where underserved communities partner with the federal government to address problems specific to their communities. 

SMUD’s heat map can be a framework for understanding the unique needs of communities served by all electric and gas utilities across the country.  It identifies needs specific to each region so that the most beneficial resources can be deployed in the right areas. 

Emerging Opportunities for Low-Income Customers 

 
Prepaid Electricity Plans

To reach a clean energy future, with participation from low-income customers, taking baby steps is the best-case scenario.  Some customers may not be able to take advantage of clean energy in the near-term, but utilities can still empower them to take on a role that supports saving energy. 

Coupled with prepaid electricity plans, low-income customers can get dollar for dollar visibility into their electricity usage, and see how energy-efficient use of electricity can help reduce their spending.

Ampra Energy is a 100% green energy provider that allows for prepaid electricity plans.  According to Prepaid Energy Hub, “By 2021, there could be between 2.62 million and 2.86 million households using a smart, meter-based, prepaid electric service.” 

Prepaid plans are on the rise, but for them to work across the country there needs to be a way to implement these plans in regulated states where people cannot choose their provider. This is the job ahead for utilities and regulators.

Community Solar Gardens 

Prosumers, customers creating their own energy through solar panels, are on the rise.  In part, this is because the cost to own solar panels is decreasing. But they still aren’t affordable for low-income customers in most areas of the country. In contrast, programs such as Community Solar Gardens (CSG) are helping provide groups with solar power through a shared cost model, and can be affordable and give utility customers credits towards their bill.  With CSGs, properties or neighborhoods work together and produce solar energy which can then be sold to utilities and exchanged for credit that goes towards individual electricity bills. 

According to the Solar Energies Industries Association, “Community Solar allows for equal access to the economic and environmental benefits of solar energy generation, regardless of the physical attributes or ownership of an individual’s home or business.”  Supporting programs like this is a win-win for utility companies and their customers.  Low-income customers have incentives to produce clean energy, all while getting credit towards their bills. 

In the article, “Solar Gardens: Clean Energy Within Reach of Low-Income Families,” Brian Lewis writes, “To support CSG programs, state governments and public utilities commissions (PUCs) should work with utilities to determine fair standards for Community Solar Gardens within their jurisdictions.”  Lewis also states, “Utilities should work with municipalities to institute these programs within their jurisdiction, under CLEAN contracts that will allow everyone to reap equal benefits from solar incentives.” 

Taking advantage of this opportunity could be more challenging in regulated states where utilities don’t truly want customers producing their own electricity, but this sentiment seems to be changing. 

Emerging Lower Cost Opportunities

While the divide between the amount of high-income and low-income customers using clean energy has been growing, utilities have a tremendous opportunity to move it back in the other direction by understanding the unique needs of populations in their service territories. SMUD’s heat map is an excellent example of this. 

Once we know who needs what, we can get our customers in touch with the companies who are offering more affordable products and services, including solar panel manufacturers, affordable EV carmakers, technology companies, and others. This is already happening at many utilities where partner products are offered on utility websites.

Utilities that educate their customers about these opportunities make it possible, even for those in low-income communities, to participate in our clean energy future.

 

Caitlyn Gibbons

Caitlyn Gibbons

Content Writer, Appos Advisors and Utility 2030 Collaborative

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