ACEEE Report: Utilities’ Efficiency Programs Underserve Low-Income Homes
By Ayla Kanber, Earth Forward Group
According to a new research report from the American Council for an Energy-Efficient Economy (ACEEE) “Meeting the Challenge: A Review of Energy Efficiency Program Offerings for Low-Income Households”, most gas and electric utility energy efficiency programs serve a disproportionately small number of low-income households. Of the 75 utilities evaluated in ACEEE’s 2017 report, this discrepancy occurs despite designedly increasing investments for low-income customers between 2015 and 2019. Specifically, average electric utility spending grew 8% ($8.2M to $9.6M) and average gas utility spending grew 77% ($7.6M to $14.4M).
According to the latest report, 27.5% of all U.S. households are considered low-income, but only receive about 13% of electric and gas utility energy efficiency spending. This statistic reveals that low-income communities that have the greatest needs are still not receiving equitable funding.
The 2022 report reviews 97 utilities, and states that the average spending per eligible low-income household that received energy-saving upgrades in 2019 was $2,059. This means that the spending per customer averaged $35 across all eligible households (including those that were not served). At that rate, it would take nearly 6 decades to serve all low-income customers with an average level of efficiency services. It would take even longer to deliver comprehensive energy upgrades to all low-income households that would reduce energy bills and greenhouse gas (GHG) emissions.
We are glad to see utilities increasing their efficiency investments for low-income households, but they’re still not providing adequate energy-saving help to many families that need it the most. Though some utilities have made low-income households a priority in their efficiency programs, all of them need to work harder to serve disadvantaged households with energy upgrades that reduce utility bills and make homes more comfortable and healthier.
— Statement from Steven Nadel, executive director of ACEEE and coauthor of the report
The report includes recommendations and best practices for utilities’ program design to improve low-income energy efficiency program offerings:
- Offer dual-fuel programs wherever possible;
- Create a single point of contact and one-stop-shop approach that simplifies access and information for eligible households;
- Set multiple thresholds or definitions for eligibility to streamline enrollment and reach more households;
- Coordinate with other organizations, particularly local community-based organizations, WAP service providers, and bill payment assistance programs on program outreach and delivery;
- Address health and safety issues to avoid program deferrals and;
- Offer deep saving energy efficiency measures and a variety of measures to best meet participant needs.
Ultimately, deeper saving programs are needed to provide the benefits increasing energy affordability, reducing energy burdens, and addressing energy poverty. To effectively address energy insecurity, it would also benefit low-income communities if utilities design programs that devote more resources to disinvested communities that have higher energy burdens. This would require utilities to collect extensive data on customer demographics, energy burden, and geographic factors in order to understand the current state and measure efficacy of their program impacts.
Other key findings from the report include:
- Data from 2019 show spending of about $936 million on ratepayer funded low-income energy efficiency programs by the 93 electric and gas utilities for which we have data, up significantly from a similar study based on 2015 data.
- The programs provided by the 97 electric and gas utilities in our database served about 1.5 million program participants in 2019, with many receiving low-cost measures such as LED light bulbs and energy-saving kits, as well as tens of thousands receiving more comprehensive weatherization services.
- Relative to the number of U.S. households with income at or below 200% of the federal poverty level in each utility service territory, the average annual participation rate per low-income energy efficiency program was about 5%, although many of these households received only low-cost measures. Programs offering comprehensive weatherization programs tend to invest more and have greater direct energy use savings.
- Some states have recently established a goal of at least 1% average annual savings for low-income customers, but electric utilities for whom we have the relevant data averaged only 0.2%. Nationwide, energy efficiency programs across all programs and income levels are reducing energy consumption by 0.72%. Low-income energy efficiency programs are providing less than a third of this benefit to low-income households, leaving this population underserved.
- Several utilities stand out for strong low-income program performance, such as several utilities in California, Commonwealth Edison, Eversource, National Grid, and Detroit Edison. These utilities allocate substantial funding, offer comprehensive services, often have multiple programs, and work with partners to address different segments of the eligible population (e.g., single-family and multifamily retrofits as well as low-cost measures).
- Low-income energy efficiency programs rarely use equity metrics (e.g., energy burden) to inform their program offerings. Several utilities have a goal for program accessibility, yet often do not have more comprehensive equity-focused goals that would help inform and prioritize resources and program impacts.
Overall, the ACEEE report indicates that despite recent efforts, low-income households are not receiving the assistance they need from utilities’ energy efficiency programs. However, the report includes recommendations, best practices, and resources that provide direction for utility companies so that they may improve their energy efficiency programs to benefit low-income households and disadvantaged communities in both the short- and long-term.
