The U.S. Energy Information Administration reports that 1 in 3 Americans struggle to afford energy, and 1 in 5 forego necessities, such as food or medicine, to pay energy bills bills. For low-income households, the gap between affordable energy bills and actual energy bills is estimated at $1,250 per year, amounting to an $1.8 billion energy affordability gap in Michigan in 2016, according to public financing consulting firm Fisher, Sheehan, & Colton. Thus, Michigan’s 3 million low-income residents, who on average occupy older, less energy efficient homes, face severe energy insecurity.
Policies such as the Clean and Renewable Energy and Energy Waste Reduction Act, aim to reduce energy consumption and save energy customers money, through utility-sponsored energy efficiency investments. While reports indicate this policy has achieved statewide energy savings, less is known about whether investments and savings have been equitable across low-income and non low-income energy customers.
A new report by researchers in the Urban Energy Justice Lab at the University of Michigan’s School for Environment & Sustainability, led by graduate research assistant Ben Stacey, evaluated utility investments and energy savings resulting from Michigan Energy Waste Reduction programs from 2010-2016 for the state’s two major investor-owned utilities. The study sought to establish a metric for measuring social equity in energy efficiency investments and energy savings, called the Energy Efficiency Equitable Baseline (E3B). The study found gaps in both investments and household energy savings between programs targeting low-income customers and those targeting non low-income customers. Levels of disparities varied substantially by both energy provider (utility) and energy type (electric or natural gas). The study found that for every $1 invested in programs targeting low-income customers, up to $4.34 was invested in programs targeting non low-income customers. For every 1kWh (kilowatt hour or a unit of electricity consumed) saved in low-income homes, up to 22kWh are saved in non low-income homes.
As state policies transition towards energy that is both economically efficient and environmentally sustainable, it is critical that program evaluations include an energy justice lens. Integrating this critical perspective, may result in reducing energy affordability gaps and achieving more equitable program investments and energy savings.
“We want to make sure we’re not leaving out one-third of the state’s population,” said graduate student Ben Stacey, who co-authored the report with Tony Reames, director of the Urban Energy Justice Lab.