Who pays and who benefits? Energy burden, fairness and jobs

Split a Prairie City plan’s cost across household groups three ways and watch energy burden move, then count jobs and the tax base when a coal county’s plant retires

A13 of Energy Systems, Step by Step: recover a Prairie City plan’s yearly cost per kWh, by a fixed charge and by income, and read each household group’s energy burden; see that moving a cost is a transfer, not a new cost; then count job-years against permanent jobs, gross against net jobs and the county’s tax base when a coal plant retires. Every output is a screening estimate.
  • Analyst · L2
  • 30 min guided · about 30 min practice
  • After A4 and F11

The idea in one table: a $24M yearly plan cost split three ways (screening estimate)

Prairie City is fictional; its numbers are illustrative. A year, per household; burden = home energy spending ÷ income.
Group (share of area median income) Households Per kWh: charge, burden after Fixed charge: charge, burden after By income: charge, burden after
0–30% (burden before 14.9%) 16,225 $192, 16.4% $237, 16.7% $37, 15.2%
30–50% (burden before 6.5%) 13,184 $211, 7.1% $237, 7.2% $94, 6.7%
50–80% (burden before 4.2%) 20,282 $223, 4.7% $237, 4.7% $151, 4.5%
80–100% (burden before 3.3%) 11,155 $240, 3.6% $237, 3.6% $211, 3.6%
100%+ (burden before 1.9%) 40,564 $269, 2.0% $237, 2.0% $413, 2.1%
  • A transfer. Every design recovers the same $24M; moving from per kWh to a fixed charge shifts $1.34M a year onto lower-income groups, and the money moved adds up to zero.
  • Ridge County (fictional). Its coal plant retires: 1,150 jobs on site, about 1,840 with suppliers and spending (multiplier 1.6).
  • Job-years against jobs. 2,000 MW of wind and solar at $1,500 per kW give about 7,200 job-years of building gross (5,760 net of 20% displacement), and about 192 permanent jobs gross, 154 net.
  • One timeline. Building in years 1–2 and running in years 3–20, net of displacement, against 20 years of lost jobs: −28,275 job-years.
  • Tax base. The plant paid $60.0M a year at 2.0%; the new farms pay $30.0M: −$30.0M for the county's budget, the mines' coal taxes held fixed. The payment is a transfer: it uses up nothing.

Every coefficient is an illustrative input, not a prediction. With JavaScript on, you set them yourself, step by step.

  • Prairie City is fictional; its numbers are illustrative. Its five household groups (bands of area median income) come from the course's shared city data, anchored to Wichita's incomes and Kansas's 2025 prices.
  • Ridge County and Prairieland are fictional; their numbers are illustrative. The plant, its jobs, the county's tax revenue and the new farms are set for teaching.
  • Screening estimates. The plan's cost and every coefficient (direct jobs per $M and per 100 MW, the multiplier, displacement, the tax rate) are your inputs, not predictions; the sources below say where real values come from.

Need a refresher? A4 designs tariffs and finds cross-subsidies; F11 reads energy burden by income.

What you just did, as diagrams

Who pays depends on the design
Per kWh the poorest group's burden rises 1.5 points, with a fixed charge 1.8 and by income 0.3, for the same $24M a year.
A transfer is not a cost
Moving from per kWh to a fixed charge shifts $1.34M a year between groups; the money moved adds up to zero.
Grouping changes the story
Below 80% of area median income the merged burden is 6.1%; the poorest group alone carries 14.9%.
Job-years are not jobs
7,200 job-years of building, gross, last two years; 1,840 permanent jobs lost add up to 36,800 job-years over 20 years.
Gross is not net
192 new permanent jobs gross, 154 net of displacement: a net change of −1,686 against the jobs lost.
One timeline
Building in years 1–2 and running in years 3–20, both net of displacement, against 20 years of lost jobs: −28,275 job-years.
Tax is a transfer
The county's revenue falls $30.0M a year, the mines' taxes held fixed. The payment uses up nothing; what the smaller budget does to services is not estimated here.
Go deeper · AnalystReal costs, transfers and real income-based designs
  • A real cost uses something up: wires, equipment, labour, fuel. A transfer moves money between people: taxes, rebates, a charge moved from one group to another.
  • Count each once. Add real costs to judge a plan and read transfers to see who gains and who loses; adding a transfer to a cost counts it twice.
  • Real designs. California’s regulator adopted a fixed charge in three income tiers for its large utilities (income-based charge; CPUC Decision 24-05-028, May 2024).
Go deeper · AnalystWhere real job and tax coefficients come from
  • Input-output models. NREL’s JEDI models turn spending into jobs and count a construction job as one full-time year; they report gross jobs only.
  • Multipliers. BEA’s RIMS II sells regional multipliers for output, earnings and employment; new ones came out on 5 May 2026.
  • Baselines. BLS’s Quarterly Census of Employment and Wages counts jobs and wages by county and industry; DOE’s USEER counts energy jobs by technology.
  • Taxes. Rates, assessments and abatements are set by each state and county: read the local rules, not a national average.
Go deeper · ModelerThe accounting layer, as a model you can reuse

Take groups \(g\) with \(n_g\) households, income \(y_g\), use \(e_g\) (kWh) and home energy spending \(s_g\). A yearly cost \(C\) becomes a charge per household

\[c_g = \frac{C\,e_g}{\sum_h n_h e_h} \ \text{(per kWh)}, \qquad c_g = \frac{C}{\sum_h n_h} \ \text{(fixed)}, \qquad c_g = \frac{C\,y_g}{\sum_h n_h y_h} \ \text{(by income)}\]

  • Burden after: \((s_g + c_g)/y_g\). Every design gives \(\sum_g n_g c_g = C\), so the difference between two designs sums to zero: a transfer.
  • Jobs. With direct (on-site) new permanent jobs \(J_{\text{new}}\), direct jobs lost \(J_{\text{lost}}\), multiplier \(m\) and displacement \(d\): net permanent jobs \(= m\,(J_{\text{new}}(1 - d) - J_{\text{lost}})\).
  • Job-years over \(T\) years from retirement, building first for \(b\) years: \(m\,[(B + (T - b)\,J_{\text{new}})(1 - d) - T\,J_{\text{lost}}]\), with \(B\) the direct building job-years (spending in the county \(\times\) direct job-years per $M).
  • Reuse. The page’s accounting is one small shared component, whopays.js, that the course’s city sandbox and capstone can call with a plan’s cost and its changes in use.
  • An energy model does not produce these outcomes by itself: it gives costs, energy and MW; an accounting layer like this one turns them into who pays and who gains.
Go deeperWhat this lesson leaves out
  • How households and firms respond to prices, and how people move, retrain or start firms.
  • What the plan delivers to each group: cleaner air, lower bills from efficiency, reliability.
  • Who gets a say in the decision, as well as who pays.
  • Field surveys, interviews and causal studies of labour markets: the social-science methods behind real estimates.

Check yourself

Practice, about 30 minutes: four myths, then six exercises with worked answers.

Myth or fact? “Moving a plan's cost from one group of households to another makes the plan cheaper.”

  • Myth
  • Fact
Answer

Myth. Every design here recovers the same $24M a year; the money moved between groups adds up to zero, a transfer.

Myth or fact? “A fixed charge weighs most on low-income households.”

  • Myth
  • Fact
Answer

Fact. $237 a year is 1.8 points of burden for the poorest group and 0.2 for the top group.

Myth or fact? “A two-year construction boom of 3,600 jobs replaces 1,840 permanent jobs.”

  • Myth
  • Fact
Answer

Myth. With this page's inputs, building gives 7,200 job-years before displacement; the lost jobs add up to 36,800 job-years over 20 years.

Myth or fact? “A plant's property tax is a resource cost, like the fuel it burns.”

  • Myth
  • Fact
Answer

Myth. The plant's $60.0M a year of tax moved money from owners to the county and used up nothing; losing it cuts the county's budget, with effects on services and the region this model does not estimate.

Practice · about 30 minutes on your own

  1. The per-kWh rate by hand. Prairie City's households use 1,162,169,159 kWh a year. What rate recovers $24M?

    Answer

    $24M ÷ 1,162,169,159 kWh = $0.0207, about 2.07¢ a kWh.

  2. A fixed charge against income. Split $24M equally over 101,410 households. How much does it add to the burden of a household earning $13,000?

    Answer

    $237 a year each; 236.66 ÷ 13,000 = 1.82%, so +1.8 points.

  3. The same share of income. By income, what share of its income does every household pay?

    Answer

    $24M ÷ total household income $8,428M = 0.285%; +0.3 points for every group.

  4. Group, then read. Households below 80% of area median income: how does their merged burden compare with the poorest group's, before the plan?

    Answer

    Merged: total spending ÷ total income = 6.1%; the 0–30% group alone: 14.9%. The merged average hides the tail.

  5. Job-years against jobs. $1,500 per kW for 2,000 MW, 30% spent locally, 5.0 direct job-years per $M, multiplier 1.6. Compare with 1,840 permanent jobs lost over 20 years.

    Answer

    $3,000M × 30% = $900M; × 5.0 = 4,500 direct job-years; × 1.6 = 7,200 job-years in all (gross), against 1,840 × 20 = 36,800 job-years lost.

  6. The county's budget. Plant value $3,000M, new farms $3,000M with 50% taxable, rate 2.0%. What changes for the county's budget, and what does this model leave open?

    Answer

    $60M lost, $30M gained: −$30M a year for the county's budget, the mines' taxes held fixed. The payments use up nothing; what a smaller budget does to services, and to the region, is not estimated.

Screening estimate: your inputs and the stated assumptions, not a prediction. Prairie City is fictional; its numbers are illustrative. Ridge County and Prairieland are fictional; their numbers are illustrative.

Numbers, sources and what’s next

Numbers to remember

Number What it means Source
6% · 2% Average energy burden of U.S. households below 80% of area median income, and of the others (2018–2022 data). U.S. DOE, LEAD tool · read 6 Nov 2026
6% · 10% Burdens that ACEEE calls high and severe: conventions, not physical limits. ACEEE, How High Are Household Energy Burdens? · Sep 2020
2,080 hours One full-time job for one year: the unit of a construction job-year in NREL's JEDI models. Interpreting JEDI Results · updated 28 Jan 2026
Gross only What JEDI's results count: net effects would subtract displaced activity. Limitations of JEDI Models · updated 28 May 2026

Keep going

Back to the course map

In the real world

California's regulator adopted a fixed charge in three income tiers for its large utilities in May 2024: the same revenue, split by income (CPUC Decision 24-05-028).

Its effects on real households are for studies of the rollout; this lesson makes no claim about them.

Sources and further reading

Spotted an error, or stuck? Write to hlli@ksu.edu. Corrections are made in place and dated here.

Text licensed CC BY 4.0, code MIT: teachers and students may reuse and adapt it, with credit to Honglin Li.