California Allocates Funds for Economically Challenged Communities

Recognizing the growing importance of energy storage as a means for alleviating pressure on the grid, the California Public Utilities Commission has modified the manner in which certain public purpose funds are distributed, so as to assure a greater focus on bringing energy storage projects to those neighborhoods where most residents qualify as low-income or where the surrounding area has been deemed to be “environmentally burdened.” More specifically, the commission ordered that 25% of the monies collected for energy storage developments through the state’s Self-Generation Incentive Program (SGIP) are to be set aside for such limited-income regions. 

The commission related that many citizens in lower-income communities often reside in older premises that are among the least energy-efficient in the state. As a result, the commission said, their energy usage can exceed that of consumers having a similar demand profile but who live in more energy-efficient structures. In turn, the commission stated, such lower-income ratepayers face bills that account for a disproportionate share of their resources. 

Given those circumstances, the commission conveyed that it has long been working toward bringing more self-generation and distributed generation (DG) opportunities to such areas. After reviewing the data on energy storage, the commission determined that not only limited-income communities, but the state as a whole, would benefit from such DG and energy storage projects being more widely available in such neighborhoods. 

The commission chronicled the history of the SGIP, noting that it was first established in 2001 in response to Assembly Bill 970, which tasked the commission with providing incentives for installing more DG in an effort to reduce peak energy demand. Since that time, the commission said, it has refined and expanded the program several times. The most recent changes came just this year, when the budget for the SGIP was doubled for the years 2017 to 2019. 

The commission reported that for those three years, the SGIP has an annual budget of $166 million. The total amount reserved for energy storage technologies was estimated to be $220 million. Thus, the amount earmarked for energy storage projects in economically challenged regions was set at approximately $55 million. 

The commission remarked that the SGIP energy storage funds assigned to low-income areas would not be restricted to just residential consumers. Rather, the commission said, certain schools, nonprofits, small businesses, and local and state governmental agencies also could share in the funds, provided they are located in a census tract that falls within the 25% most disadvantaged statewide. The definition of disadvantaged encompasses not just income limitations, but also exposure to environmental hazards, as from being in close proximity to power plants, industrial facilities, or other sources of noxious emissions. 

Although nonresidential entities would be allowed to participate in the SGIP energy storage initiative, the commission directed that at least 10% of the 25% set-aside be used exclusively for single family and multi-family low-income housing. The commission stated that it was convinced that providing special funding for extending energy storage  technologies into economically challenged communities would help bring 

1. rate relief to the residents themselves, 
2. new economic and workforce opportunities to designated areas, 
3. less stress on the grid, and 
4. improved air quality to the benefit of the state overall. 

In endorsing a special SGIP carveout for qualifying low-income and otherwise disadvantaged communities, the commission affirmed its long-standing position that the attributes stemming from California’s clean energy policies and directives should not be assured only for the state’s more economically secure citizens. Instead, the commission maintained, the success of such plans as the SGIP depend on the benefits of DG and other green energy solutions being deployed in an equitable manner that assists every consumer in reducing their demand and lowering their energy bills, regardless of their financial circumstances. Re Policies, Procedures, and Rules for the California Solar Initiative, the Self-Generation Incentive Program, and Other Distributed Generation Issues, Decision 17-10-004, Rulemaking 12-11-005, Oct. 12, 2017 (Cal.P.U.C.)