Transitioning a Community Away from Fossil-Fuel Generation to a Green Economy: An Approach Using State Utility Commission Authority

Abstract

A transition is starting throughout the nation as renewable energy resources are developed and older fossil-fuel facilities retire. The communities that bear the brunt of fossil-fuel pollution will also likely bear this transition’s economic impacts. Yet, there is no guarantee that these communities will share in the transition’s economic benefits—in particular, the building, operation, and ownership of new renewable energy resources. Renewable energy laws generally do not consider these types of impacts when determining where to site new resources. The California Public Utilities Commission (CPUC), in a case involving Native Americans in Arizona affected by the operations and closure of a recently retired coal-fired power plant, developed a novel plan to generate a revenue stream from a closed power plant to assist an impacted community with a transition to renewable energy. The CPUC’s decision provides an important roadmap for other states to consider communities impacted by the operation and closure of fossil-fuel facilities as the energy grid transitions into green resources. The CPUC’s creative approach provides a framework for considering how to transition a community away from fossil fuel generation. Other state utility commissions have similar authority as the CPUC, and creative disbursements like this can provide the necessary incentive to spur critical green development in impacted areas. Consideration of the equities, as the CPUC has illustrated, can be done consistent with an agency’s jurisdictional authorities in a way that does not undercut ratepayer or other potential interests.