The Making of an Energy Ghetto

The utility industry’s efforts to turn back the clean-energy revolution would block low-income communities from realizing the benefits.

via Shutterstock

By Denise Fairchild

The clean-energy revolution is underway, and so is the war against it. As with every other major economic transition, this battle will have winners and losers. For low-income communities of color, the stakes are especially high: Will they reap the benefits of the emerging clean-energy economy or will they be locked into energy ghettos?

Here’s the context. Renewable energy — solar and wind — is quickly replacing fossil fuels as the preferred energy source. It is now cheaper than coal and most other fossil fuels. Innovative financing mechanisms have eliminated out-of-pocket costs for installing these technologies, enabling homeowners to save and even earn money from energy production. For example, “net metering” lets solar-powered households sell their surplus energy back to the grid for a profit — sending their electric meters spinning counterclockwise.

The utility sector is not happy with these developments, and it is fighting back. A recent Washington Post article cites utilities’ efforts to influence legislators, state public service commissions and — of particular concern — minority organizations. They want to eliminate net metering and assess households with solar-power systems a monthly surcharge to offset the utilities’ sunk capital investments and maintenance costs. And they have convinced some minority organizations that, without the surcharge, the poor will pay more through rate hikes as clean-energy and net-metering schemes benefit only well-to-do families.

This is a specious argument with potentially dangerous and unfortunate consequences, particularly for low-income residents. Eliminating net metering or placing a surcharge on households that migrate off the grid would foster a two-tiered energy society. These steps would render solar power unaffordable for low-income households, locking in historical racial and class hierarchies. The problems are analogous to the forces that created and sustained central-city ghettos.

Specifically, the surcharges are a form of redlining that limits or otherwise makes community infrastructure investments prohibitively expensive and fosters infrastructure obsolescence. This is similar to the benign neglect and the discriminatory practices that created urban ghettos of the mid-20th century.

The deterioration and blight that afflicts ghettos results principally from the lack of public and private investments needed to maintain, modernize and develop basic infrastructure, such as houses, roads, water and sewer lines. Our energy infrastructure — the “grid” — remains similarly neglected. National investments in local distribution peaked in 2006 and have declined to levels not seen since1991, according to a 2013 report by the American Association of Civil Engineers.

While the utility industry suggests that the surcharge it is seeking would prevent grid disinvestment, the reality is that revenue from such a fee would amount to but a trickle of what’s needed to build a modern, resilient energy infrastructure. Public-housing residents in New York City know about resilient energy infrastructure — or, rather, the lack of it. After Superstorm Sandy, some of the city’s most vulnerable people were off the grid for weeks with no alternative source of power.

Net metering surcharges are also akin to restrictive covenants, which legally prohibited certain races from the benefits of living in American suburbs, locking African-Americans and other ethnic groups into urban ghettos. Surcharges similarly lock the poor and people of color out of the emerging clean-energy future, including not only cleaner, cheaper and newer energy options but also the “green” jobs that these new industries are creating.

Finally, imposing surcharges or eliminating net metering would solidify and accelerate wealth disparities. Net-metering policies generate wealth by turning property owners and communities into energy producers, offering a rare opportunity for residents of low-income communities to build personal wealth. Surcharges will only block poor families from owning their own energy assets.

We need to rethink grid investments, but not at the expense of a clean-energy future. The clean-energy transition is as profound and disruptive to the status quo as the changes in the music and telecommunications industries. And it’s exciting: It can strengthen our energy, economic and health security. That’s a vision that minority communities fully support — and our leaders should too.

Denise Fairchild is president/CEO of Emerald Cities Collaborative, a national nonprofit organization of business, labor, and community groups dedicated to climate resilience strategies that produce environmental, economic, and equity outcomes.

This post was produced as part of the Island Press Urban Resilience Project, with support from The Kresge Foundation and The JPB Foundation. Originally published on Governing.