4

Energy Affordability and Burdens

Technology deployment alone doesn’t solve energy poverty, if people feel like when we actually deploy that technology, they can’t afford to use it.

—Destenie Nock, Carnegie Mellon University¹

Adrienne Hollis, National Wildlife Federation, introduced the workshop’s fourth session, a discussion of existing energy affordability burdens and equitable measures to address them. The speakers were David Nahai, Nahai Consulting Services and LADWP (retired); Gregory Pierce, University of California, Los Angeles; Destenie Nock, Carnegie Mellon University; and Sacoby Wilson, University of Maryland. Speakers noted the following:

• Energy insecurity is a critical—yet often overlooked—issue in planning for an equitable energy transition.
• Energy poverty can be challenging to measure based on income level alone, suggesting a need for a multifaceted approach to identify vulnerable households and provide assistance where appropriate.
• Momentum is building for energy justice, the notion that those most adversely impacted by fossil fuel infrastructure should be “first in line” to benefit from a just transition.

___________________

¹ Destenie Nock, Carnegie Mellon University, presentation to the workshop on July 26, 2022.

AFFORDABILITY AND THE PATH TO 100 PERCENT RENEWABLES

Nahai highlighted LA100 as a model for other cities aiming to move away from fossil fuels, especially for communities that have not benefited from energy infrastructure in the past. As other speakers mentioned, LA100 and follow-on projects have elucidated pathways to achieve 100 percent renewable power with attention to safety, reliability, affordability, and equity. Local and statewide mandates for renewable energy have helped spur progress toward this ambitious goal, but achieving it will require substantial additional investment, significant updates to and deployment of renewable energy sources, grid modernization, higher levels of energy efficiency, and more support for EVs, as documented in LADWP’s Strategic Long-Term Resource Plan.²

Nahai stressed that while rate increases may be inevitable in funding these investments, they must be structured equitably so as to avoid overburdening communities such as low-income customers and seniors living on a fixed income. Beyond energy rates, he added that energy efficiency programs, such as community solar projects, should specifically favor disadvantaged communities. Finally, Nahai said that a just transition must include workforce development programs that center both compensation and dignity. “If we’re going to be a humane, civil, and decent society, we’re going to have to take care of those who have worked honorably, who have given of themselves to make a better society for all of us,” Nahai said.

A FOCUS ON ENERGY INSECURITY

Pierce underscored the critical role that energy affordability plays in a just energy transition. Renewable energy sources can raise energy bills and thereby increase burdens on customers, with particularly detrimental effects on lower-income households and households of color. These groups of customers already faced higher rates of energy insecurity before COVID-19 and saw substantial increases in shutoff and debt rates during the pandemic.³ On the positive side, the pandemic created new momentum around energy affordability, with most states instituting shutoff bans and progressive payment policies. However, Pierce noted that most of these measures have now expired, allowing private and public utilities to pursue shutoffs and debt recovery focused on low-income households.

___________________

² Los Angeles Department of Water and Power, 2022, “Strategic Long-Term Resource Plan,” https://www.ladwp.com/ladwp/faces/ladwp/aboutus/a-power/a-p-integratedresourceplanning.

³ D. Hernández and J. Laird, 2022, “Surviving a Shut-Off: U.S. Households at Greatest Risk of Utility Disconnections and How They Cope,” American Behavioral Scientist 66(7):856–880, https://doi.org/10.1177/00027642211013401.

To keep energy affordable, Pierce suggested that utility companies should offer progressive rates, limited fixed charges, discounts, and efficiency measures to reduce demand.⁴ In addition, he suggested that utility debt can be resolved by both deepening existing assistance programs and creating new ones, perhaps modeled on Southern California Edison’s Arrearage Management Program, a debt forgiveness payment plan.⁵

ADDRESSING HIDDEN FORMS OF ENERGY POVERTY

Nock discussed the importance of recognizing and addressing hidden forms of energy poverty as part of energy transition planning and evaluation. The concept of energy burden focuses primarily on the cost of energy, while energy insecurity encompasses cost as well as reliability and the risk of outages. Energy poverty encompasses both energy burden and energy insecurity, as well as supply concerns. Nock posited that no single metric captures energy poverty, but approaching the question from multiple angles can help identify households that are energy poor and guide approaches to ensure that they are not left behind in the energy transition. Affordability is key. “Technology deployment alone doesn’t solve energy poverty, if people feel like when we actually deploy that technology, they can’t afford to use it,” said Nock. It is also important to acknowledge that while energy investments happen on the macroscale, many solutions need to be implemented at the microscale.

Using large-scale smart meter data assessments has helped Nock and her team to identify why some households under-consume energy and examine different metrics for understanding energy poverty. One approach is to look at energy bills as a percentage of household income. However, looking at energy costs only as a percentage of gross income often misses the full picture, because energy is one of a plethora of often non-negotiable expenses such as housing, student debt payments, commuting and vehicle costs, and groceries. Once these factors are accounted for, the full burden of energy as a percentage of disposable income is quite high in many low-income households.

Another approach is to look at how people perceive and manage their energy use. For example, asking people whether they actively limit their energy use can help to identify which households feel overburdened. In addition, tracking the outdoor temperature at which people turn on

___________________

⁴ M. Graff, S. Carley, D.M. Konisky, and T. Memmott, 2021, “Which Households Are Energy Insecure? An Empirical Analysis of Race, Housing Conditions, and Energy Burdens in the United States,” Energy Research & Social Science 79:102144, https://doi.org/10.1016/j.erss.2021.102144.

⁵ Southern California Edison, 2022, “Arrearage Management Plan,” https://www.sce.com/residential/assistance/Arrearage-Management-Plan.

their air conditioning reveals clear patterns. Nock and colleagues found that low-income households tend to wait to turn on air conditioning until the outdoor temperature is 4–7° hotter than higher-income households do.⁶ This gap widens as energy prices increase, and this difference can have real impacts on health as many people die during heat waves despite having air conditioning at home.⁷ Understanding the drivers and manifestations of energy poverty will be important considerations as utilities plan for future energy demands and governments consider the best ways to provide assistance to create an equitable energy transition.

ADVANCING ENERGY JUSTICE

Wilson outlined four pillars of energy justice: healthy and sustainable energy production; clean energy infrastructure, especially for those historically denied it; affordable energy; and uninterrupted service.⁸ Noting that the burdens of fossil fuel infrastructure, extraction, emissions, transport, processing, combustion, and waste fall disproportionately on disadvantaged communities and communities of color,^9,10 he said that energy justice recognizes the right of those most impacted to be involved in the energy transition to ensure procedural equity, while distributional justice requires that they also benefit from the transition. “To think about energy justice, we need to move away from dirty energy infrastructure to clean energy infrastructure, and those who are disproportionately impacted by the legacy and the history and the current dirty energy infrastructure, they should be at the front of the line to get the clean energy infrastructure, and a higher proportion of it,” said Wilson.

Energy justice also means going beyond addressing job loss to encompass energy sovereignty, freeing communities from hosting polluting energy infrastructure without benefitting from it, which he termed “environmental slavery.” “People can produce their own energy and be free

___________________

⁶ S. Cong, D. Nock, Y.L. Qiu, and B. Xing, 2022, “Unveiling Hidden Energy Poverty Using the Energy Equity Gap,” Nature Communications 13:2456, https://doi.org/10.1038/s41467-022-30146-5.

⁷ S.A. Iverson, A. Gettel, C.P. Bezold, et al., 2020, “Heat-Associated Mortality in a Hot Climate: Maricopa County, Arizona, 2006–2016,” Public Health Reports 135(5):631–639, https://doi.org/10.1177/0033354920938006.

⁸ R.J. Heffron and D. McCauley, 2017, “The Concept of Energy Justice across the Disciplines,” Energy Policy 105:658–667, https://doi.org/10.1016/j.enpol.2017.03.018.

⁹ National Association for the Advancement of Colored People (NAACP) Clean Air Task Force, 2017, “Fumes Across the Fence-Line: The Health Impacts of Air Pollution from Oil & Gas Facilities on African American Communities,” https://naacp.org/resources/fumes-across-fence-line-health-impacts-air-pollution-oil-gas-facilities-african-american.

¹⁰ NAACP, 2016, “Coal Blooded: Putting Profits Before People,” https://naacp.org/resources/coal-blooded-putting-profits-people.

of the utilities and free of these systems which lead to these differential burdens,” said Wilson.

Momentum is building, from the Justice40 Initiative, from Maryland’s Greenhouse Gas Reduction Act,¹¹ and from other laws and programs, to ensure that historically impacted communities have a voice in energy investments and benefits. Wilson pointed to examples in which communities have rejected projects that did not promote energy justice; communities are also increasingly taking a lead role in conducting research to better understand health impacts. Looking ahead, Wilson suggested prioritizing energy justice in policy initiatives in several key areas, including port electrification; climate mitigation and resilience; community solar projects; access to and incentives for EVs, chargers, and green infrastructure; and equitable workforce development—as well as funding mechanisms to sustainably support these efforts.

DISCUSSION

In an open discussion, participants delved further into issues around energy equity and explored different approaches to reducing energy burdens for low-income households.

Cody TwoBears, Standing Rock Sioux tribal member and co-founder of the Indigenized Energy Initiative (IEI), highlighted particular energy challenges many Indigenous communities face. He noted that energy costs on reservations can be double the costs paid in nearby communities on a per kilowatt hour basis, and added that a reliance on poorly constructed, energy-inefficient houses further increases energy burdens in many communities. He asked what lessons or approaches the IEI might glean from other efforts to guide its battle for equitable energy and health policies. Nahai suggested leveraging the Justice40 Initiative to address building needed energy infrastructure, and creating energy co-ops on tribal lands to encourage energy sovereignty.

In reply to another participant’s question, Pierce described several different models for lowering energy bills for resource-constrained customers. One model is percentage-of-income payments, an approach that has been deployed or piloted in several U.S. states, in which energy bills are capped at a particular percentage of income and utilities or other entities make up the difference. However, a downside of this is that it requires income verification and is therefore administratively burdensome, creating barriers to enrollment on the part of both utilities and customers. Approaches that are potentially less burdensome include

___________________

¹¹ Greenhouse Gas Reduction Act, 2021, “Maryland General Assembly,” http://mde.maryland.gov/GGRA.

upstream rate design structures, efficiency measures, solar deployment, and crisis relief.

Nock added that demand response capabilities could be better leveraged to improve energy equity by not only flattening the peak part of the demand curve (essentially making higher-income customers a little less comfortable during peak times) but raising up the valleys at the low part of the demand curve (helping lower-income customers be more comfortable during lower demand times). This could be accomplished, for example, with smart meters and bill caps for lower-income customers, and it would have the added benefit of enhancing reliability by reducing the need to ramp production up as quickly during transitions from low to high demand periods. Miller asked for additional details on how equity metrics could be incorporated into policy and implementation. Nock replied that it is often difficult to incorporate those metrics because customer usage data are frequently privately controlled and demographics data are not always available. It is also hard to know what other expenses customers face for their basic needs that should be accounted for in determining energy burden in relation to income.

Jonathan Patz, University of Wisconsin–Madison, asked if communities had any legal recourse if utilities decide to reopen decommissioned coal power plants or delay planned closures. Wilson replied that the judicial history and recent rulings suggest this would be challenging, although the National Environmental Policy Act may provide some options. He suggested that communities should approach such events on a case-by-case basis, noting that such events would further delay the energy transition and impose greater environmental burdens on affected communities.