Low-Income, Minority Households Bear Costs Of Solar Subsidies

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Peter Fricke Contributor
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Government subsidies make residential solar panels more affordable, but also lead to higher electricity bills for non-solar customers, especially low-income families and minorities.

A policy called “net metering” acts as an implicit subsidy paid for by non-solar customers in the form of higher rates. This has drawn criticism from minority groups that say those costs are disproportionately borne by low-income families. (RELATED: SOLAR SCAMS: Arizona Moves to Protect Homeowners)

“In other words, power providers must purchase excess solar from homeowners at the same price they charge their retail customers, even though the utilities can’t control when the power is available or how much of it there will be,” Lance Brown, executive director of the Partnership for Affordable Clean Energy, wrote Tuesday in an op-ed for The Hill.

“The trouble with this game is that it doesn’t account for use of the electrical grid,” according to an editorial in the Palm Beach Sun-Sentinel. “As power companies are happy to remind customers, the grid isn’t free,” the editorial says, noting that about one-third of the average electricity bill “reflects the cost of building and maintaining the wires and substations that deliver that power.”

Although solar panel users “use the grid like everyone else,” they not only contribute less toward the cost of operating the grid by consuming less power, but also receive an inflated price whenever they sell excess power (for instance, when the sun isn’t shining).

“Economically, such a pricing scheme distorts every principle of the free market,” Brown claims, pointing out that power companies are not even allowed to charge solar customers “for the luxury of using the public grid as a battery.” (RELATED: Solar Industry Demands Extension of Subsidies)

Harry Alford, president and CEO of the National Black Chamber of Commerce, claimed in a press release Tuesday that such economic distortions have a “socially regressive societal impact,” citing a recent study by utility regulators in Louisiana which found that solar customers “have incomes 35% higher than the median statewide income.”

“When we pay solar owners a higher-than-market rate for their power, we throw basic economics out of balance,” Alford argued. “Because of overly generous net metering payments, those with the means to install costly solar panels are shifting costs to other customers, including low-income families and those on fixed incomes.” (RELATED: Europe’s Green Energy Industry Faces Collapse as Subsidies are Cut)

Hispanics are also “being hit with high electricity bills that they can’t afford, thanks to … net metering,” Jose Nino said in an article for Energy Biz Sunday. “It’s lower-income and minority communities, including Hispanics, who are forced to essentially subsidize these rooftop solar systems because they’re the ones who can’t afford to own them.”

In California, according to Nino, “the typical rooftop solar customer has an average household income of $91,000” whereas the national median income for Hispanics is just $39,005. To make matters worse for low-income families, he added, “those who live in apartments … don’t even have the option of installing solar panels.”

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