August 31, 2020 | Justin Brant
Access to energy for heating, hot water, transportation, and other uses is a necessity of modern life. Nationally, low-income households, on average, devote 7.3% of their income to electricity, natural gas, and other fuels used at home, with some households paying far more. This represents a large percentage of income, a situation known as “energy burden.” In addition, throughout the west, transportation is the second largest expense for low-income households, behind only housing.
The number of customers struggling to pay energy bills is increasing with the impacts of COVID-19. While most states in the Southwest have temporarily ceased utility disconnections for non-payment, the number of customers behind on their energy bills is skyrocketing. As of July 7, almost 150,000 Xcel Energy residential customers had an unpaid electricity or gas balance.
Low-income households generally live in buildings that are older and less efficient, and use older and less efficient appliances. This leads to higher energy bills as well as health and safety hazards. To provide long-term relief to low-income households, utility and government-funded energy efficiency programs can target low-income households.
For example, in Nevada and New Mexico, at least 5% of utility energy efficiency program budgets must be devoted to low-income programs—policies that SWEEP initiated. In addition, the cost-effectiveness of low-income energy efficiency programs is often considered differently. For example, Xcel Energy in Colorado applies a 50% non-energy benefits adder to low income programs, while all other programs have a 20% non-energy benefits adder. This accounts for the fact that low-income programs provide significant health and safety benefits, reduce bill arrearages, improve occupant comfort, and more. It also allows low-income programs to target opportunities and measures that may not be cost-effective in other circumstances.
SWEEP has long worked to ensure that low-income households are well served by energy efficiency and clean transportation programs in our region. However, with the economic impacts of COVID-19 causing significant hardship around the region and SWEEP’s Statement on Racial Injustice and Inequality as a backdrop, we are committed to doing even more to ensure that lower income families and underserved communities of color benefit from energy efficiency policies and programs. In addition, we support efforts to increase funding for energy bill assistance for those families most in need.
SWEEP’s Transportation Program helps reduce transportation costs and cut pollution by improving vehicle efficiency, accelerating the adoption of electric vehicles (EVs), and reducing overall transportation demand. We advocate for vehicle electrification policies and programs that reduce up-front costs and expand charging infrastructure, and we strive to ensure that vehicle electrification doesn’t just benefit the wealthy. For example, SWEEP supports targeted EV incentives for households below a specific income threshold. SWEEP is currently working on an e-bike incentive program in Colorado to help low-income essential workers purchase an e-bike. In addition, SWEEP supports policies that enable people to live closer to where they need to go, while also increasing the availability, quality and affordability of public transit.
Our Utility Program works to expand low-income energy efficiency programs. In Arizona, the Corporation Commission recently approved increased incentives for emergency air conditioning replacement for customers who have lost their jobs as a result of COVID-19. In Nevada, NV Energy has restarted its low-income energy efficiency programs after cutting funding in previous years, due in large part to our advocacy. In New Mexico, SWEEP recently proposed a significant expansion of low-income services as part of a new DSM plan for Public Service Company of New Mexico, a recommendation the utility accepted.
Finally, SWEEP promotes equity as a component of initiatives to advance beneficial electrification in buildings in the Southwest. Replacing fossil fuel combustion with efficient electric devices such as heat pumps and electric ranges can significantly improve health and safety inside homes and businesses, while also reducing greenhouse gas emissions. SWEEP advocates for including electrification measures within programs serving lower income households, while also expanding incentives and financing options so that all customers can benefit from building electrification.
Low-income families have long been a focus of SWEEP’s work to promote more efficient energy use and clean transportation in the Southwest. Today, we are redoubling our efforts to ensure that these families as well as communities of color reap the benefits offered by greater energy efficiency and beneficial electrification.
ABOUT THE AUTHOR: Justin Brant is the Co-Director for SWEEP’s Utility Program, where he works with utilities and consumer groups to advance energy efficiency in SWEEP’s six-state region.