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The role utilities and utility regulators can play in addressing systemic inequities

Published March 8, 2021

2020 was a challenging year (understatement). All of us have been affected, in some way, by COVID-19 and measures taken to slow its spread. That said, Minnesota’s COVID-19 Response data shows that the pandemic has been disproportionately harmful to certain demographic groups. Throughout the pandemic, Black, Indigenous, and People of Color (BIPOC) Minnesotans have been losing jobs, getting sick, and dying at disproportionately higher rates than the population at large. These bleak statistics, combined with the public outcry following the death of George Floyd, have caused many advocacy groups, industry leaders, politicians, and other influencers to call for a renewed focus on dismantling systemic inequities – and preventing new inequities from developing – as we continue to move through, and beyond, the pandemic. This article identifies a few examples of how utilities and utility regulators are addressing equity in the utilities sector.

In February 2021, Wisconsin’s utilities commission announced that it would seek workforce diversity and energy burden data from utilities. Namely, all 609 of Wisconsin’s regulated electric, gas, and water utilities will now be required to include demographic information (including data on race, ethnicity, gender, disabilities, and veteran status) for their employees and boards of directors in annual reports submitted to Wisconsin’s Public Service Commission (PSC). In addition, Wisconsin’s investor-owned utilities with at least 15,000 customers will now be required to provide diversity information on their suppliers, including procurement goals and actual spending with businesses owned by minorities, veterans, women, LGBT individuals, or people with disabilities.

Wisconsin’s PSC chair Rebecca Valcq said this in a statement on the requirement:

Diversity and inclusion within the utility industry are not just important because of the tremendous impact they have on both employees and the financial health of the utility. Ultimately, diversity and inclusion efforts impact the manner in which utility customers are served. Collecting this data also will provide an opportunity for our partners to encourage diversity and inclusion throughout the industry.

This is a bold step and one that reflects an increasing focus on addressing inequities in the utilities and energy sectors.

But that’s Wisconsin… What about Minnesota?

 

The Minnesota’s Public Utilities Commission’s efforts to address equity

To date, Minnesota’s Public Utilities Commission (PUC) has not required Minnesota’s public utilities to comply with equity-related reporting requirements as detailed as those now required in Wisconsin. However, Minnesota’s PUC has issued orders in several dockets that we hope will help regulators, utilities, and stakeholders better discuss and address equity moving forward. Below are some examples of how equity has come up in PUC dockets here in Minnesota.

Economic Recovery (Docket No. 20-492)

In May 2020 the PUC opened an “Economic Recovery docket,” wherein the PUC required Minnesota’s public utilities to report on initiatives and investments that could assist in Minnesota’s economic recovery from the COVID-19 pandemic. Among those reporting requirements, the PUC required utilities to identify existing or proposed initiatives that utilize businesses owned by women, members of minority racial groups, or veterans.

Many organizations and individuals filing comments in the Economic Recovery docket (including CUB) recommended that the PUC make equity a primary consideration in determining which utility initiatives demand the most immediate attention and approval. Any initiative to improve the current economy – especially one paid for by utility ratepayers – should be sure to benefit those communities that are disproportionately being harmed under this economy, and should be sure not to reinforce existing inequities. The Commission has since broken out several initiatives proposed in the Economic Recovery docket into separate dockets for more detailed consideration. CUB, along with several other like-minded advocacy organizations, will continue to raise equity considerations in these dockets to encourage the PUC to prioritize those initiatives likely to address inequities – and not those likely to perpetuate or expand existing inequities.

Data Access Standards (Docket No. 19-505)

The PUC recently approved data access standards in response to a CUB petition that would enable academic institutions and nonprofit organizations like ours to access utilities’ aggregated or anonymized customer energy usage data. Accessing such data will help consumer advocates determine, among other things, whether utility programs or services disproportionately impact low-income households, households of color, or other types of Minnesotans. For example, by analyzing anonymous energy usage data for customers in the Chicago area, the Illinois CUB discovered that low-income households in the Chicago area generally pay more than their fair share for electricity and are actually subsidizing higher-income households.

The PUC adopted CUB’s proposed standards late last year and is implementing them incrementally. They will be taking additional comments from parties and the public before requiring utilities to provide access to anonymized data and certain types of aggregated data.

Xcel’s Electric Report on Safety, Reliability, and Service Quality (Docket No. 20-406)

Each year, investor-owned utilities submit Safety, Reliability, and Service Quality reports (“SRSQ Reports”) to the Commission. In recent years, the PUC has split these reports into two sections – one on safety and reliability and another on service quality. Based on recommendations from advocacy organizations, the PUC added a third section on locational equity metrics to be included in Xcel Energy’s SRSQ Reports moving forward.

In late 2020, the PUC ordered that Xcel must address these expanded reporting requirements in its next SRSQ Report, which is due on April 1, 2021. In its order, the PUC also required Xcel to work with a stakeholder workgroup to develop an interactive map illustrating the correlation between reliability and zip code. By comparing these data to data included in public census records, the PUC, utilities, and other parties will have increased opportunity to evaluate whether variations in reliability correlate with and disproportionately impact low-income households and/or households of color.

Utility Disconnections During Peacetime Emergency (Docket No. 20-375)

Since the summer of 2020, the PUC has required regulated utilities to submit monthly reports on disconnections and arrearage data affecting customers during the Governor’s peacetime emergency declared to slow the spread of COVID-19. Such reports are prepared according to criteria negotiated by CUB, the Energy CENTS Coalition, and others. Recently, the PUC ordered utilities to continue this reporting beyond the expiration of the peacetime emergency, and to expand reports to include the number of residential customers disconnected by zip code. Again, by comparing these data to data included in public census records, the PUC, utilities, and consumer advocates will have increased opportunity to evaluate whether disconnections are likely to disproportionately impact low-income households and/or households of color.

Xcel Energy’s Integrated Resource Plan (Docket No. 19-368)

Minnesota regulations require investor-owned utilities to periodically file “Integrated Resource Plans” (IRPs) to provide details on their 15-year, forward-looking forecast of how much electricity their customers will need, and how the utility plans to meet that demand. The IRP process involves opportunities for advocates and members of the public to file comments on the IRP. Often, those comments focus on the costs-vs-benefits of various proposed investments, on the utility’s reliance on renewable energy resources vs. fossil fuels, reliability, and other topics.

In the summer of 2020, Xcel filed its latest IRP with Minnesota’s PUC. Many stakeholders, including CUB, have submitted comments on Xcel’s plan. Though stakeholders’ comments raise many topics typically raised in the IRP process, several commenters have also identified equity as an issue that must be considered as Xcel plans for the future. This reflects a growing trend among stakeholders insisting that equity issues be addressed in regulatory processes surrounding utilities’ business operations.

 

Minnesota Utilities’ efforts to address equity

Many of Minnesota’s public utilities, too, have voluntarily announced plans or made statements suggesting they are committed to addressing equity in both their internal policies and customer-facing programs and services.  

For example, executives from several of Minnesota’s investor-owned utilities have made statements acknowledging the need for utilities to play a role in combating inequities. Examples of such statements include the following:

“Now more than ever, our customers and our communities are dependent on the reliable and affordable energy that America’s electric companies provide, and our industry will play a critical role in the nation’s recovery from the pandemic. This industry must also play a role in finding solutions for racial inequity with ongoing dialogue on how we can make a difference.” – Xcel Energy CEO, Ben Fowke speaking at an Edison Electric Institute event in June 2020.

“I really believe that we at [Minnesota Power], have to be part of the solution and that we have influence and have privilege and we have to use that influence and privilege to address systemic racism.” – Minnesota Power CEO, Bethany Owen, speaking as part of the TCB Talks: Women in Leadership 2020 in October 2020.

Many public utilities have also embraced Environmental, Social Governance & Sustainability (ESG) reporting in recent years. ESG reporting is driven by investors, who are increasingly interested in investing in businesses that engage in environmentally and socially responsible business practices. Examples of equity-related statements included in Minnesota utilities’ ESG reports include the following:

In addition to the Internal Audit and Business Risk Management Department, Otter Tail Corporation maintains departments and committees that research, recommend, implement, and report workforce and sustainability efforts. Leaders throughout the enterprise oversee efforts to ensure safe, respectful, and inclusive work environments where talented people thrive. We respect and value diversity among our employees and all those with whom we do business – Otter Tail Power 2019 ESG Report

CenterPoint Energy is also dedicated to advancing a diverse and inclusive work environment. Renewed attention to long-standing racial injustices and continued divisions within our country has increased our drive to foster a work environment that is inclusive, diverse, tolerant and respectful for all of our employees. – CenterPoint Energy 2020 ESG Report

As equal opportunity employers, our companies comply, and require suppliers to comply, with all federal, state and local employment laws, rules and regulations. Our Supply Chain department has implemented steps to help us do business with qualified suppliers that share our philosophies. […] Procurement policies are designed so that all departments work with Supply Chain to bid work fairly. Supply Chain verifies that the bid list is fair, inclusive of minority- and women-owned business enterprise suppliers, and consistent with our bid process rules. […] Supply Chain supports supplier diversity by providing training on bidding processes and technologies, and facilitating meetings between the end user and diverse suppliers. – WEC Energy Group (MERC) 2019 Corporate Responsibility Report

These statements are, in many ways, positive indicators of utilities’ renewed focus on equity, and we applaud utilities for making them. On the other hand, they are only statements. We believe it is important for advocates, ratepayers, vendors, regulators, utility staff, shareholders owning stock in utilities, and others to hold utilities accountable for ensuring that their actions match their words.

 

What can Minnesotans do to promote equity in Minnesota’s utilities sector?

There are several ways Minnesotans can help advance equity considerations in Minnesota’s utilities sector.

First and foremost, you can make your voice heard by engaging in public comment processes surrounding regulatory dockets and legislative initiatives. If you become aware of a regulatory docket at the PUC that interests you, you have the opportunity to submit a comment for consideration by the Commissioners. Instructions for filing comments are available here. Likewise, if you are interested in a bill introduced at the Minnesota legislature, contact your state senator or representative to share your thoughts – especially if you are personally impacted by the bill. You may have the opportunity to testify at a legislative hearing to tell your story.

Second, hold utilities accountable for commitments they make to address inequities. Whether you are a ratepayer, a utility vendor or supplier, or a shareholder, if you believe a utility’s practices do not align with its public statements, let them know. Adding your voice may be just what is needed to shift a policy or practice in a more equitable direction.

Finally, reach out to local advocacy organizations and community groups that regularly participate in regulatory and legislative processes impacting utilities operating in Minnesota. CUB, of course, is a great place to start – we would love to hear what equity means to you.

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Author: Brian Edstrom

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