This story was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

State regulators on Monday released their draft rules for what to do with all the hazardous oilfield waste that’s left over once a well is drilled. The announcement gives the public one month to comment on the new rules — while some industry representatives started giving input more than two years ago, documents and interviews show.

Oilfield waste executives and consultants helped write the regulations beginning in 2021. Oil and gas business advocates also gave feedback to the Railroad Commission of Texas, which regulates the industry.

The effort was initiated by a commissioner who has investments in oilfield waste companies. Jim Wright, one of the agency’s three elected commissioners, ran for his seat with an eye on rewriting what’s known as Rule 8. Wright owns stock in several hazardous waste management companies in Texas, according to statements filed with the Texas Ethics Commission.

In an interview, Wright brushed off critics who suggest his involvement in the industry makes him a biased regulator. He said that he had little to do with re-writing the rules after he became commissioner, and that, if anything, his position on the Commission has hurt his businesses rather than helped it. Few companies want to risk doing business with companies associated with regulators, he said.

“For those who think this is my rule — what Jim Wright wants — that couldn’t be further from the truth,” Wright said. “Even before I came to office, [commission] staff knew we really needed to take a hard look at Rule 8.”

Wright said he believes the new rules will benefit all Texans, not just the oilfield waste industry.

Supporters of industry’s early involvement say the rules, which haven’t been significantly revised since 1984, needed to be changed to make the permitting process more efficient and to allow new waste recycling technologies to be permitted. Critics say the revised regulations would benefit the industry over the public.

“There’s an obvious conflict of interest if the industry gets to rewrite their own rules to their own financial benefit, and they end up writing rules that make people sick or contaminate groundwater and put our collective future at risk,” said Virginia Palacios, executive director of Commission Shift, a watchdog group that advocates for stricter financial policies for commissioners.

Michael Lozano, who does communications and government affairs for the Permian Basin Petroleum Association, which provided input on the draft rules to the Commission before they were released, disagreed.

“With all due respect to our friends on the environmental NGO side, they don’t know what the field application is; they don’t understand what operators are literally doing day in and day out,” he said. “We all want robust environmental standards.”

In an email, Railroad Commission spokesperson Patty Ramon said soliciting very early industry input is typical for the agency’s rulemaking process. Ramon said that at least one member of the public who had protested a facility’s permit in the past was also invited to provide early feedback.

The obscure rules govern the disposal of massive amounts of waste. Companies drill thousands of wells every year in Texas. They typically pump mud into the ground as they drill; rocky soil and a salty liquid known as “produced water” then comes up along with the oil and natural gas. All that waste has to go somewhere.

That’s where Rule 8 comes in.

The Railroad Commission uses Rule 8 to decide how companies should handle that material. Unlike most hazardous waste, the toxic muck from the oilfield is exempt from federal regulations. The state regulations govern how waste can be recycled or dumped — typically in pits near the well or in commercial hazardous waste pits.

The pits can leak toxic chemicals and radioactive materials and pollute surface or groundwater if not properly managed.

In recycling, the mud can be cleaned and used for more drilling, rocks and gravel can be used to build roads and some of the less-contaminated water can be removed for other uses. However, “produced water” is most often injected back into the earth under a different permit, a method that has caused an increase in earthquakes across West Texas.

The rule change would impose new environmental standards such as restricting where waste pits can be located; allow companies to suggest new forms of oilfield waste recycling; and limit who can protest permits, which environmental groups warn could limit public input. However, Ramon wrote that filing a protest is “not a cumbersome process” and that the changes would prevent competitors from filing protests.

Texans have until 5 p.m. on Nov. 3 to give feedback on the draft changes by filling out an online form or attending a meeting at 10 a.m. Oct. 26 at the Commission’s office or 9 a.m. Oct. 27 online at adminmonitor.com/tx/rrc. There will then be another formal proposal and chance for comment later.

Residents want more protections; new rules would allow industry-created pilot programs

Throughout the state, Texans for years have tried to stop oilfield waste dumps from moving into their communities — a fight that some say is already an uphill battle.

Southeast of San Antonio, outside a tiny city called Nordheim, drivers haul waste to a commercial pit facility next to 63-year-old Ron Pilsner’s family’s farm. His father and grandfather grew up there. A ranch-style home anchors the property, surrounded by Black Angus cattle, oak trees and grassland.

Pilsner says the facility ruined their sense of peace: Bright lights shine from it at night. There’s constant beeping from vehicles backing up and often the wafting stink of petroleum, insecticides and what he describes as a smell like skunks. He no longer wants to open the windows and he worries about the waste pits’ liners leaking and contaminating the area’s groundwater.

Nordheim residents tried to stop a San Antonio-based developer from building the pits in 2014. Pilsner’s parents, Marvin and Bernice, joined the protesters, who put up “DON’T DUMP ON NORDHEIM” signs with a skull and crossbones. The couple went at least once to Austin to ask the Railroad Commission not to approve the project.

The agency approved it anyway; a lawsuit by residents seeking to overturn the decision failed.

After Petro Waste Environmental began construction and operations, the nuisance grew bad enough that Pilsner’s dad stopped renovating the farmhouse, where he planned to retire. A typically frugal man, he spent $16,000 on new furniture, Pilsner said. He moved into a nursing home before he ever got to sleep on the new mattresses. He died last year.

On a scorching, triple-digit September afternoon, Pilsner toured the waste pit’s perimeter with Sister Elizabeth Riebschlaeger, an 87-year-old Catholic nun who had family who lived in Nordheim and who supported the residents in their fight. Riebschlaeger argued the commission needed to give citizens more of a say.

“Of course we’re defeated,” Riebschlaeger said, “but we’re still making noise.”

Waste Management, which acquired Petro Waste in 2019, said it was in compliance with the current Rule 8 and did not expect to need to make any changes based on the draft rules.

The company said it did stop accepting some materials in 2021 that smell and was investing in reducing truck traffic at the facility. “At WM, safety is a core value and we are committed to being a good neighbor,” the statement said.

Under the draft rules, only people like the Pilsners who own land adjacent to a proposed waste pit or recycling facility would be notified of a company’s intent to locate its facility there.

And only people who can prove they would suffer “actual injury or economic damage” from a waste pit would be allowed to protest a new facility permit — a definition that would limit environmental groups’ influence in stopping new pits from being built. Those people would have 15 days to file a protest, from the time the company filed the application or last provided public notice, and the company would then have 30 days to either withdraw its permit application or request an administrative hearing to settle the dispute.

The draft rules also introduce an option for companies to create pilot programs for their waste: Instead of dumping it in pits or recycling it, companies could propose alternative recycling methods not covered by the rules.

The change addresses the industry’s concern that the current regulations aren’t flexible enough to include new technologies. But environmental groups worry that new methods could get a fast-track to permits with little oversight.

The new rules otherwise update existing standards, adding detail and codifying what was internal guidance used by Railroad Commission staff. For example, under current rules the pits are required to have a plan to manage stormwater runoff, including during intense rainfall events, and cannot be located in a floodplain. Under the new draft rules, such pits also can’t be located on a beach, barrier island, or within 300 feet of wetlands, rivers, streams or lakes. Nor can they be located within 500 feet of any public water system well or intake location.

The old rules said liners for waste pits must “reasonably” prevent pollution but didn’t include specific standards. The draft rules say pits must be lined with a plastic strong enough to resist damage from crude oil, salts, acids and alkaline solutions. Critics of the commission said the new liner standards aren’t much stronger than the internal guidance used by the agency.

Critics also point out that the draft rules don’t spell out the penalties when pits leak or operators violate the rules of their permit. Ramon, the commission spokesperson, said that more details on fines would be available in the formal rule proposal and would likely be similar to existing regulations.

Fines can be determined on a case-by-case basis and could be reduced if a company demonstrates “good faith;” critics say that would give companies more wiggle room to contest fines.

Industry drafts the rules

The draft rules fulfill a goal and campaign promise for Wright, a Republican from South Texas who was elected to the Railroad Commission in 2020. Wright first tried to influence the agency’s regulations years ago, when he was part of the oilfield waste services industry.

Wright was the CEO and president of a Corpus Christi company called Environmental Evolutions, which hauls hazardous waste, and has investments in other hazardous waste companies, according to state filings. Along with some of his customers, Wright wanted to help guide the commission’s staff on how to more consistently apply the regulations affecting them, he said.

At the time, one commissioner agreed to give the group access to commission staff members, according to an interview Wright did on a podcast, but none of the staff actually wanted to work with them on the rules at that time. A 2019 bill to formalize a commission-appointed oil and gas advisory group failed to pass.

So Wright decided to run for a seat on the Railroad Commission.

Wright received campaign donations from the oilfield waste industry, according to campaign finance reports. NGL Water Solutions Permian LLC, the oilfield waste division for Tulsa-based NGL Energy Partners, is one of Wright’s top donors and has given him $226,000 since 2019; a company executive gave an additional $2,500. The company has also donated to the campaigns of the other two commissioners, Christi Craddick and Wayne Christian.

In an interview, Wright said that campaign fundraising was a “necessary evil” to be in politics, but that campaign donations don’t impact his decisions on the Railroad Commission and that he makes that clear to donors.

After he defeated the better-funded incumbent Ryan Sitton in an upset, Wright’s staff turned to the waste rules, internal documents show. An investigative watchdog group called Documented obtained copies of the documents through public records requests and shared them with the Tribune.

Wright’s former director of public affairs, Kate Zaykowski, helped facilitate the formation of a regulatory task force that included at least seven people from oil and gas and oilfield waste companies, including Pioneer Natural Resources and Waste Management, Inc.

Beginning in early 2021, the task force went page-by-page through a years-old attempt to revise the rules, using it as a framework to define more clearly how permits can and can’t be approved, said Kevin Ware, an environmental engineering consultant who chaired the task force. The task force then gave its proposal to the commission.

Commission staff then invited powerful oil and gas lobbying groups to take part in an “informal review” of the task force’s recommendations. Representatives from major companies such as ExxonMobil, Apache Corp. and Chevron were invited to attend commission meetings about the rules. Those companies and at least one lobbying group sent feedback and questions.

Mark Henkhaus, a consultant and former Railroad Commission employee who chaired a regulatory committee for the Permian Basin Petroleum Association, sent an email in August 2022 to a commission staff member raising concerns that an oil waste company may have been trying to craft the rules to its benefit.

“I want to make sure that the waste handlers are not using the Commission to further their business, if you know what I mean,” Henkhaus wrote. Henkhaus declined to comment.

Aaron Krejci, Wright’s director of public affairs, said that while Wright had reactivated the task force and requested their input, he was not involved in the group’s deliberations or suggestions to agency staff.

“The task force was helpful in getting the proverbial rulemaking ball rolling,” Krejci wrote in an email. But he added, “The rule which was just released is not a product of the task force, but rather the Commission staff who have been working internally on these updates for quite some time.”

And Wright said that if the regulations were simply to benefit the waste management industry, they wouldn’t change at all — the status quo is almost always better for business.

Instead, he characterizes the draft rules as a step forward in the Railroad Commission’s ability to better regulate an industry that’s dramatically changed over the last four decades and protect water resources from pollution. He points out that the rules include new setbacks from surface water and better standards for lining waste pits.

“I think it benefits Texas, not just industry,” Wright said. “I don’t see [how this rule] was formulated for the benefit of industry at all.”

Carla Astudillo contributed to this story.

Disclosure: Exxon Mobil Corporation and Permian Basin Petroleum Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

This story was originally published by Grist with the headline In Texas, oilfield companies helped to craft new waste rules for 2 years before the public got to see them on Oct 9, 2023.

This story was originally published by Capital B.

With their heads bowed, eyes shut, and hands locked, the Southwest Crossing Community Initiative starts every meeting with a prayer: “Please, protect us from a deadly explosion.” 

“And please, cover us … and ease our minds.” 

Southwest Crossing is an aging community in Houston where nearly 20 percent of residents are over 65. They know, as it is, the average American is expected to live only a decade after retirement. It’s even less for Black people, and much of the disparity concerns the daily stress of racism. 

Since 2021, the group has been in a life-draining fight with CenterPoint Energy, a $40 billion company. That year, CenterPoint, the only investor-owned electric utility company in Texas, quietly announced a plan to build a facility holding 300,000 gallons of liquid propane against the neighborhood’s back wall. 

“It’s environmental racism, that’s obvious,” said Southwest Crossing resident Marilyn Rayon. “It’s also mental warfare. We’ve all suffered from lack of sleep, anxiety, mental issues.”

While environmental justice activists often focus on elevated cancer risks and respiratory illnesses caused by fossil fuel infrastructure, chemical exposure, and pollution, these residents have shifted their attention to the mental health impacts.

The small group of Black Southwest Houston residents argue that the movement to ensure environmental parity should factor in these sometimes invisible harms.  

The group’s mental health struggles stem from what it feels were deceitful actions used by the energy company to place the facility in the neighborhood and the daily worry of a leak or explosion. For some, it has rehashed trauma from the disasters that have defined parts of their life, from experiences in the U.S. military to explosions at neighboring chemical plants. The group of mainly retirees says they can barely sleep and require therapy and anti-anxiety medication to get through the days. 

Their fears have merit. Propane — a fossil fuel-based energy source that is the byproduct of natural gas processing and petroleum refining — has been touted as a more reliable energy source during winter months, but it comes with risks. Because propane is heavier than air, if it leaks, it settles quickly and lower to the ground, leading to an even greater risk of ignition, fire, and explosion than natural gas. A 2014 report says there are about 300 fires and explosions annually at such facilities. 

While CenterPoint allowed the legal minimum of 18 days for residents to object, city officials confirmed that COVID-19 precautions and mail delays denied the neighborhood a chance to fully voice its objections to the facility. So last November, it became operational, but the fight just began. 

Now, once again, with little engagement, CenterPoint is trying to run a new natural gas pipeline through their properties. 

Residents say they became aware of the plan to build the new pipeline only after noticing company employees surveying their property without permission. Because the pipeline is for gas distribution to CenterPoint customers from a CenterPoint-owned gas facility and not a transmission line between two facilities, it does not require a new operating permit from the state of Texas. 

In a statement to Capital B, CenterPoint outlined various points of communication with Southwest Crossing residents since 2021 and said the company is “committed to open communications with our customers and community members.” The outline did not mention any communication regarding the pipeline.

Based on the proposed map, CenterPoint may likely distribute the gas to Houston’s quickly growing, majority-white suburbs just west of Southwest Crossing. CenterPoint declined to share where the gas would be transported. 

According to residents, CenterPoint has offered homeowners $9,500 to purchase pieces of their undeveloped land to run the pipeline. As residents attempt to stifle the plan — roughly two dozen households have declined the offer — the use of eminent domain is looming in the predominantly Black neighborhood.

Scientific studies dating to the early 2000s have called for greater attention to the mental health struggles of living near industrial sites. It has been connected to insomnia, increased levels of depression and anxiety, and even the fear of venturing outside your home. 

“You work all your life and give and go through so much,” said Rayon, “and at the end of your life, after you’ve worked to keep the community nice, they just drop something in your neighborhood that they know is dangerous.”

Several members of the collective, which includes about a dozen residents, say therapy and counseling sessions have helped, but it solves nothing if the threat of disaster remains imminent. 

The added infrastructure to their community compounds risks they’ve struggled with since the housing tract was built in the 1980s. The neighborhood is less than 2 miles from an air pollution hotspot where the cancer risk from air pollution is four times higher than the Environmental Protection Agency’s limits. 

Within 1 mile of the community, there are already three pipelines carrying natural gas, crude oil, and other highly volatile liquids. 

Climate change and a growing city

The environmental justice crisis ruminating in the backyards of the Southwest Crossing neighborhood is the product of climate change and an unstable energy grid that has failed to accommodate the nation’s second-fastest-growing metropolitan area. 

It exemplifies a growing worry across many of the South’s largest and quickest growing cities, like Dallas, Atlanta, and Jacksonville, Florida. When a city grows, infrastructure — sewage and drinking water systems, streets and highways, and electric grids — struggles to keep up. Construction follows, but throughout U.S. history, infrastructure build-out has routinely caused displacement and increased environmental burdens for cities’ most marginalized communities.

The fatal winter storm Uri in 2021 created a flashpoint for Texas’ struggles. After an estimated 700 people died and 5 million Texans lost power, the energy sector explored options to strengthen the grid. 

For CenterPoint, that led to a $40 billion spending plan to strengthen its position on the electric grid. The plan included retiring coal plants and building out more solar power generation, but also nearly $20 billion in national gas expansion. 

Increasing their natural gas and propane storage capacities is key to that expansion. The Southwest Houston facility is CenterPoint’s fifth built in Houston since 2019; four facilities are in neighborhoods that are majority people of color. 

CenterPoint said the company is “committed to the safe, reliable delivery of natural gas” and the new facilities will help ensure “enough supply to keep natural gas flowing to customers during those times of peak demand, such as during the 2021 winter storm.”

During emergencies, when the demand for electricity spikes, stored propane and natural gas can be rapidly inserted into the pipeline system. This significantly decreases the likelihood of service disruptions for customers in need. 

However, environmentalists contend that the practice is an extension of the environmental racism that has plagued Black communities like Southwest Crossing for generations and limits investment into more renewable and reliable energy sources such as wind and solar power. 

“If you look at where these five new [CenterPoint propane storage] plants are, four are in Black and [Latino] neighborhoods,” said resident Angela King. “Why is that?”

Texas leads the nation in wind power generation, but following Uri, the state’s legislature abruptly ramped up its criticism of renewables in favor of fossil fuels. While Texas’ deadly power outages were partly caused by frozen wind turbines, most of the power knocked offline came from natural gas.

The trend is found nationally. Despite goals to move on from fossil fuels, the U.S. is growing its natural gas capacities like no other. Between now and 2050, the U.S. is expected to be responsible for more than one out of three of the world’s new oil and gas projects. 

The continued use of natural gas means the continued extraction of fossil fuels and the use of pipelines. Nationwide, pipelines are most often found in Black neighborhoods and prone to regular leaks, accelerating climate change and posing deadly risks for neighboring communities. 

Last Christmas Eve, a leak at a similar CenterPoint propane facility in Indiana sent half a dozen people to the hospital. The company initially blamed the leak on its customers’ appliances before a state investigation found the company at fault and fined CenterPoint more than $100,000. 

In Southwest Crossing, “people pack a bag and carry it in their car just in case they need to go because of a leak or explosion,” King said.

‘Boom, we’re gone’

Brittney Stredic said she and her neighbors are closer than ever, they “talk and text and share time all the time now.”

As their relationships have grown over shared meals and gatherings in each other’s living rooms, they’ve taken the fight to legislators. They say they haven’t had much success with their city council representative, Martha Castex-Tatum. As she runs unopposed for reelection this November, 15 percent of her corporate donations have come from CenterPoint. 

However, at the state level, with support from state Sen. Borris Miles, they’ve been able to help draft four bills related to environmental permitting. One bill passed unanimously through the Texas House of Representatives. It would’ve increased the time allotment for impacted residents to submit opinions for polluting sites like the one in their backyard, although it was never brought to a vote in the state’s backlogged Senate. 

However, Stredic knows their growing bond is rooted in trauma and disappointment. 

As the pipeline battle continues, the community’s options dwindle. If CenterPoint were to request the use of eminent domain, more likely than not, Texas’ conservative courts would support it. In recent years, as other states have attempted to restrict the use of eminent domain, Texas has sharply increased the number of entities allowed to use it.

The group has considered bringing a civil rights complaint to the Department of Justice or EPA. Still, they know the process typically takes three years to offer results, and CenterPoint could easily build the pipeline within that time.

“There’s so much land in Texas, why here? Why in the neighborhood?” Stredic said. “This situation has become my greatest fear.”

These stressors and fears, she said, can contribute to poor health outcomes. A key member of their coalition, Eugene Pack, died unexpectedly last year. 

Since then, King finds herself up at 2 a.m. daily reading about the climate and health impacts of gas facilities and pipelines. Down the street, Zachary Petitt is lucky to get 30 minutes of rest at a time. 

Kenneth Burgess can barely talk about the trauma the experience has caused — and resurfaced. He worked at a chemical plant for 30 years, surviving three explosions. In 1989, he witnessed 23 of his co-workers perish. 

“I decided to live 30 miles from where I worked for a reason,” he said, “and then they still brought it to my neighborhood.” 

For Rayon and her husband, Leo, it has brought up the trauma of war abroad and at home. 

“My husband was drafted for the Vietnam War. He was in German territory,” Rayon recalled. “And when he saw [CenterPoint Energy] building that gas storage tank, he almost had a heart attack because he said it reminded him of a bunker in Vietnam.” 

Rayon fears her neighborhood will become the target of a hate crime. Since 2016, the number of hate crimes in Texas has risen from 167 to 549 in 2022. Anti-Black attacks made up the largest share of crimes by far. 

If someone wanted to target the 80 percent Black neighborhood, she said, all they’d have to do was shoot at the storage tank and “boom, we’re gone.”

This story was originally published by Grist with the headline A gas storage plant and new pipeline disrupt life in this Black community on Oct 8, 2023.

This article has been updated.

Puerto Rico is in the midst of a residential solar surge, one catalyzed by concerns over an unreliable grid, high energy prices, and destructive storms. In the six years since Hurricane Maria, solar installations have increased tenfold to more than 3,000 each month. Around 82,000 homes now use rooftop solar. Most of them include batteries, so when the power goes out, their systems keep working. 

But this powerful means of energy resilience remains beyond reach for hundreds of thousands of Puerto Ricans. The systems are expensive, and most people use leases or loans to afford them. Those with low incomes or credit scores are excluded from traditional solar financing. 

A new program from the Department of Energy’s Loan Programs Office takes aim at that problem. Last week, it finalized a $3 billion loan guarantee to Sunnova Energy, a residential solar company with nearly 350,000 customers in the United States and the largest operator in Puerto Rico. 

It will back loans nationwide under Sunnova’s Project Hestia, which makes rooftop solar, battery storage, and demand-response software accessible to households in communities struggling with high energy bills, frequent outages, and climate risks. The agreement requires that at least 20 percent of the loans be issued to customers with credit scores of 680 or less, and that at least 10 percent, and up to 20 percent, of them be issued in Puerto Rico. 

The program represents the federal government’s single largest commitment to solar energy and could help as many as 115,000 homeowners in the U.S. It also could prevent 7.1 million tons of CO2 emissions over the next 25 years. 

The carveout for Puerto Rico is part of a sweeping effort by the Biden administration to bring clean, resilient energy to the U.S. territory as fast as possible, a commitment President Biden made last year after Hurricane Fiona, when the entire archipelago was again left without grid power. But while renewable-energy advocates agree rooftop solar is key to achieving energy independence in the archipelago, not all believe the loan guarantee is the best way to help low-income households. 

Sunnova Energy has operated in Puerto Rico since 2013 and serves 60,000 customers there, accounting for 80 percent of the residential solar systems on the archipelago. It offers lease and loan financing with 25-year terms that include maintenance and repairs for the life of the agreement. Residents of Puerto Rico pay some of the highest electricity rates in the United States, and Sunnova customers there pay about 15 to 20 percent less than they would for electricity from the local utility, according to the company.

The loan-guarantee program is meant to deepen the pool of homeowners who can access financing. The median annual household income in Puerto Rico is under $22,000, 40 percent of residents live under the federal poverty line, and 40 percent do not have a credit card. Almost every census tract qualifies as a disadvantaged community under the Biden administration’s Climate and Economic Justice Screening Tool. 

“It will allow Sunnova to reach a customer that it traditionally wouldn’t be able to reach,” said Michael Juarbe-Lafitte, the company’s senior manager of government affairs in Puerto Rico. 

It is also meant to help lay the groundwork for what’s known as a virtual power plant, or VPP, which uses solar energy stored in home batteries to send power to the grid during peak demand. Since Hurricane Maria, essentially all home installations in Puerto Rico have included batteries, making it one of the places best positioned to harness this approach. All Project Hestia loans in Puerto Rico will include solar panels, home batteries, and energy management software.

Puerto Rico’s electric utility, Luma Energy, is weeks away from launching a Battery Emergency Demand Response Program, which will connect 6,000 home batteries to the grid to provide power during outages. The pilot program is meant to lead the way to a much larger expansion.

“If we could use those approximately 60,000 customers with energy stored in their batteries, we could easily replace some of these old dirty peaker plants during demand-response situations,” said Juarbe-Lafitte. “And those households will be compensated, which means money stays in Puerto Rican pockets.”

For all the benefits residential solar promises, some energy-resilience advocates say the long-term loans the Energy Department is bolstering aren’t the right model for low-income households. 

Alejandra Castrodad-Rodríguez, the executive director of Resilient Power Puerto Rico, calls the Biden administration investments “transformational for Puerto Rico.” But she says organizations like hers, which advances community resilience through clean energy, want to see those investments underwrite community, not corporate, ownership of solar installations.

“The greater the local control over these climate assets, the more resilient the communities become,” she said.

That is best achieved, she said, by subsidizing loans with shorter terms to minimize the principal, so households own their systems sooner. That would further lower their energy bills. Loans also ought to be channeled through local credit unions and co-ops. 

Marcel Castro-Sitiriche, a professor of electrical engineering at the University of Puerto Rico, Mayagüez, shared concerns about where the investments were being directed. “To provide a loan guarantee to a company that already has a large share of the solar rooftop market in Puerto Rico will provide a competitive advantage to Sunnova that could result in less competition and a deterioration of the service to customers,” he said. “We need to move in the opposite direction and incentivize local companies.”

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Castrodad-Rodríguez is also wary of any model in which vulnerable low-income households, which in Puerto Rico can mean earning as little as $12,000 a year, take on debt. She wants to know what will happen to anyone who defaults on their payments, and worries that loan costs may become higher than market energy prices over the 25-year term.

“These government incentives are what make it possible to access these households, but then the government needs to establish necessary parameters to protect those households,” she said.

A Sunnova representative confirmed that if a Project Hestia customer failed to pay, the “normal collections process ensues as it does for any other customer,” but Dan DeSnyder, the company’s vice president of capital markets, said the company does not expect customers to default because their loan payments will be lower than their current utility bills, with higher reliability.

Sunnova’s reputation in Puerto Rico has taken a hit in the past. In 2017, the Independent Consumer Protection Office asked the Puerto Rico Energy Bureau, an oversight agency, to investigate the company after receiving 1,000 complaints about deceptive sales practices and poor repair service. Two years later, the bureau released a report criticizing Sunnova’s business practices, and in 2021, required Sunnova to improve its policies. Customers nationwide have submitted similar complaints to the Better Business Bureau, which currently gives the company an F rating.

Sunnova says it has taken aggressive steps to improve customer service. “As the largest residential solar and battery-storage service company in Puerto Rico, we are proud of our history on the island and want to continue to provide clean, affordable, and reliable power services to more consumers on the island,” the company told Grist in an email. It opened a call center in Puerto Rico last April, promises a 24-hour response time on service requests, and plans to expand its service team from 16 employees to 75 by the year’s end.

A DOE spokesperson said the department’s LPO team did 11 months of due diligence prior to finalizing the guarantee, including analysis of its billing and collections, warrantees, and performance obligations under its standard customer contract, and that it will continually monitor Project Hestia.

Sunnova told Grist it will provide DOE with monthly reports on who receives loans, their FICO scores, income, locations, carbon-emissions savings, and more. 

The DOE has also built consumer protection into some of its other energy programs in Puerto Rico. A $1 billion Puerto Rico Energy Resilience Fund meant to support rooftop-solar access for the medically vulnerable and those living in last-mile communities includes $5 million to 10 million for “consumer protection efforts.”

PJ Wilson, president of the Solar and Energy Storage Association in Puerto Rico, said the rate of consumer complaints on solar companies has dropped precipitously in recent years, to around 1 percent of new installs. “Compare that with the abysmal satisfaction rate of those same customers with the grid power,” he said, “which still has the most blackouts in all of the United States, by far.” 

Update 10/6/2023: This article has been updated to incorporate a later statement from the Department of Energy.

This story was originally published by Grist with the headline Energy Department backs solar loans for low-income Puerto Ricans on Oct 6, 2023.