Mayor Muriel Bowser is selling her decision to repurpose roughly $182 million in funding for clean energy projects as a responsible, pragmatic move to save the city money on its energy costs while at the same time looking out for people grappling with rising utility bills. But is any of that spin true?
Lawmakers and environmental advocates don’t think so. Instead, they believe Bowser and her deputies are using a highly complex gimmick to patch up holes in her constrained 2025 budget, blowing up plans for new electrification projects, the expansion of residential solar, and even affordable housing development in the process. Councilmembers are desperately trying to find funding to replenish money Bowser wants to pull away from the Sustainable Energy Trust Fund and the Renewable Energy Development Fund before the budget is finalized later this month.
But that will require untangling a convoluted series of policy changes advanced by the administration and scrounging up millions in one of the District’s toughest budgets in years. Nevertheless, several lawmakers (including Council Chair Phil Mendelson) have pledged to try.
“It would take years and years and years, I would wager more than a decade, to undo the damage that would be done to the city’s ability to take action on climate if this goes through,” says Ward 6 Councilmember Charles Allen, the chair of the Council’s Committee on Transportation and the Environment.
Loose Lips must admit that this particular dispute is punishingly complicated, and it’s tempting to write off this whole issue as the sort of mess that only climate nerds may really care about. But as LL sees it, this complexity is a feature, not a bug, of these sorts of budget maneuvers, effectively deterring closer scrutiny when so many acronyms and line items are involved.
But the upshot is relatively simple: Bowser’s team was so desperate to avoid tougher choices during budget season (like making deep program cuts or raising additional taxes) that it gobbled up any money it could, consequences be damned.
“The mayor wants to take money meant to help D.C.’s most vulnerable families lower their utility bills and instead use it to pay her own utility bills,” argues Mark Rodeffer, political chair of the Sierra Club’s D.C. chapter.
So, how is that happening? This is where things start to get a bit tricky.
Let’s start with the SETF, a fund seeded by small fees on D.C. residents’ gas and electric bills. The fund should sit at about $17.6 million for the coming fiscal year, and then climb up to $26 million annually: quite a chunk of change in a year when the chief financial officer is demanding hundreds of millions in contributions to replenish the city’s reserve funds.
The SETF is meant to pay for things such as the city’s “Green Bank,” which finances all manner of energy-efficient upgrades and green redevelopment projects. And, crucially, it’s set to grow in size after the Council bumped up fees last year to pay for Allen’s Healthy Homes Act, legislation designed to help low-income households swap out gas appliances for electric alternatives.
But it proved just too tempting of a target for Bowser, and she diverted the money to pay, primarily, for electric bills from the Department of General Services, which manages local government buildings and offices. This move would not only gut Healthy Homes before it even launches, but would also devastate the Green Bank. Trisha Miller, the bank’s CEO, told Allen’s Committee last week that the change threatens a dozen projects across the city representing a combined $250 million in public and private investments. That includes up to 640 units of affordable housing supported by this financing.
In a briefing ahead of the budget’s release, Bowser’s deputies told reporters that this change was necessary to keep up with the city’s rising energy costs. They believe that the District’s renewable energy standards for major buildings, however well-intentioned, are escalating costs faster than they’d anticipated. These standards specify things like how much energy buildings should use or what percentage of renewable energy they should rely on. This diverted SETF money will fund upgrades to make government buildings more efficient, according to a Bowser official who requested anonymity to discuss the budget deliberations, which is in keeping with the fund’s “mission” of “allowing the city to become more environmentally friendly.”
“Our energy costs will have more than doubled by the end of this financial plan [in 2028] because of the practices in place,” Jenny Reed, Bowser’s budget director, told the Council at an April 3 meeting unveiling the budget. “We have to look at ways to continue to pay our energy bills without having to go back on some of the goals we set out for ourselves for the city.”
“That’s incoherent rambling with no basis in fact whatsoever,” Rodeffer said when LL recounted the administration’s explanation to him. He called it “total fiction” that renewable energy standards are increasing costs so dramatically, when they’ve had only incremental impacts on the city. Rodeffer says the renewable energy standards account “for something like half a penny of the 15 cents per kilowatt hour electricity costs in D.C.”
“It’s spin from a mayor who doesn’t care about lowering utility bills for D.C. families,” he adds. The goal of the Healthy Homes bill, which the Council unanimously passed into law Tuesday after months of lobbying from the utility companies, is to help people save money on these bills by moving away from gas appliances.
Bowser’s team has tried to frame Healthy Homes as a program that hasn’t launched yet, and is therefore better suited for a funding cut than the city’s ongoing energy needs. Most gallingly to Allen and his allies, she’s repeatedly bashed the increase on utility bills to fund the program as an unnecessary burden on ratepayers: Her own plan, of course, leaves the increase untouched, and just uses the money for a different purpose.
“I also just want to say on behalf of ratepayers, because I am one, I didn’t sign up for an increase in my utility rates last year, but it was imposed, and it wasn’t discussed how those increased rates would be used,” Bowser chided the Council at the April 3 meeting. LL finds it puzzling, then, to see Herroner’s literal signature on last year’s budget legislation authorizing the change.
Ironically, Bowser’s budget actions will actually increase the city’s electricity bills rather than lower them, which is part of the reason why she’s raiding the SETF in the first place. In a move that is somehow even more convoluted than the SETF maneuver, the administration’s budget team found a way to move renewable energy funding into its general fund to cover gaps throughout the spending plan.
That brings LL to the REDF, a stand-alone pot of money administered by the Department of Energy and the Environment to pay for a variety of clean energy projects in the city, particularly the development of residential solar power and energy efficiency upgrades on large commercial buildings. This money can’t be used for any other purpose and is statutorily required to be kept separate from the city’s general fund, per language meant to guard against politicians with wandering eyes.
A variety of different revenue sources seed the REDF. Perhaps most importantly for this drama, that includes payments from the city’s electricity suppliers if they can’t meet District standards for renewable energy generation, dubbed “alternative compliance fees.”
The city itself hasn’t generally directed its utility providers to pay these fees because it’s much cheaper to buy renewable energy credits instead. If a utility company isn’t producing enough solar energy on its own, it can buy renewable energy credits from anyone, including homeowners with rooftop solar panels. Panel owners get to use the proceeds to recoup the installation costs of the infrastructure, so the deal generally amounts to a win-win situation for both parties.
Bowser’s new budget would get DGS out of the renewable credit market altogether. Instead, the agency would tell its electric providers to pay the compliance fees, costing the city roughly $4 million more each year after the costs are passed along to the government. The mayor’s team needs the SETF money to help cover those extra costs, but it gets to count the roughly $86 million in fees as revenue over the next four years, patching some holes in the budget. This might all seem like a silly bit of accounting, but the CFO will only certify the budget if it’s “balanced.”
LL can hardly blame readers if their heads are now spinning or their eyes have glazed over. But the bottom line is that this decision also amounts to a “short-sighted” gimmick that will have long-term consequences for the city’s clean energy efforts, Allen says.
Perhaps unsurprisingly, the city is a major player in the renewable energy credit marketplace because of the size of its electric bills. If it simply stops buying the credits, there would be “an immediate effect” on the whole ecosystem, Ally Niphakis, an executive at the clean energy firm SRECTrade, told Allen’s committee. “The market will become more oversupplied in 2024 and remain oversupplied in 2025 and 2026,” Niphakis said, arguing that prices would likely fall for anyone selling the credits.
“It means everybody now has a longer payoff period for the solar that they’re putting on their homes,” Allen says. “Every church that wants to put solar on their roof to help fund their mission and keep their congregations in place, it takes them longer to pay it off and costs them more. Everything just got a lot more expensive because of this decision.”
DOEE officials have sought to downplay the significance of these changes. Director Richard Jackson argued during his agency’s budget hearing before Allen’s committee that it’s natural for the energy credit market to “fluctuate.” He added that the agency is currently “scouring our budget” to find “other funding sources” for things like the Green Bank. DOEE spokespeople weren’t able to describe those sources to LL as of press time.
“My analogy is this is like a marathon, not a sprint,” Jackson said of the agency’s overall approach toward this funding. “I just can’t go as hard in ’25. But I plan on going harder in the out years [of the budget] because we would have made the necessary adjustments to base operations in ’25, and hopefully we’ll have what we need to continue to go harder in ’26.”
Allen doesn’t make much of these arguments: “I think they’re trying to put the best spin possible on something that they probably don’t fundamentally agree with.” For instance, he says the city just got a $62.4 million grant from the feds to fund its “Solar for All” program, which is meant to support residential solar installations and is backed by much of the money Bowser is repurposing. But the federal money won’t arrive for some time, and it can’t pay for things like staffing costs to run the program, so Allen believes it’s a poor replacement for local dollars.
He’s now working to identify places where the city can pull away money and reverse Bowser’s changes. It will be difficult for him to tackle all of these issues at once—the REDF changes would require so much money to undo that it’s probably impossible to manage this year—but he appears to have Mendelson and several other lawmakers on board to help him try. It may be a much lighter lift to restore the $17 million in the SETF, specifically.
The Council chair has already pledged to devote most of his attention to reversing cuts to a fund delivering pay raises for early childhood educators, and he seems to have outmaneuvered CFO Glen Lee to make that happen. (Lee claimed the city needed to devote more than $200 million to its reserve funds in this budget, a move that Bowser says forced her to cut the child care funding.) How much money will be left over after he makes that change, and tries to deliver on his other promises to reverse cuts to public schools, is very much to be determined.
“I anticipate we’ll be doing everything we can to try to [restore the money],” Mendelson told reporters Monday. “And it’s definitely high on my list. If Councilmember Allen is able to find the money, I expect I’ll be fully supportive of that.”
Allen wouldn’t get specific on where the money may come from just yet—Council committees will release their markups of the budget over the next few weeks, then it will be up to Mendelson to craft a final version of plan before the end of the month. But one potential solution could be tacking another small fee onto utility bills, as much as Bowser may dislike that. Neither Mendelson nor Allen would commit to such a plan just yet.
“We will look at every option available,” Allen says. “Because we know the cost of inaction is pretty steep.”