Eliminating the path to energy poverty

Just as with property taxes, energy bills often require low-income families to make decisions about whether to pay for food and other basic needs, or keep the lights on and water flowing.

“This burden can end up impacting a family’s long-term health, education, employment and financial stability,” says Tony Reames, assistant professor at U-M’s School of Environment and Sustainability (SEAS) and the project’s principal investigator. “However, households can be empowered to reduce this burden when they become energy efficient, which can substantially reduce their bills.”

But questions about equity and access to energy efficiency resources remain. Through a grant from Poverty Solutions, Reames and SEAS graduate student Ben Stacey are examining whether energy efficiency investments are being distributed equitably, whether some states have policies more effective than others, and how to compare this performance across states.

“Energy efficiency offers an opportunity to address energy poverty measures like LED lighting, energy-efficient HVAC systems and insulation,” says Reames. “But current state policies often distribute funding and program benefits disproportionately across socioeconomic groups.”

Reames and Stacey first noticed this issue when researching the availability of energy efficient light bulbs in Detroit. They found that in high-poverty areas, few retailers carried efficient light bulbs and almost none provided cost-lowering in-store rebates through utility energy efficiency programs.

That finding led to a collaboration with organizations like EcoWorks Detroit, Michigan Public Service Commission and the State Energy Waste Reduction Collaborative on an analysis which found that while Michigan legislation required utilities to provide low-income targeted programs, however, did not require a specific spending level.

The team discovered that other states did have standards for distributing funding in an equitable way and they are now examining how Michigan stacks up.

“We’ve found significant difference between how states and utilities within states are performing in terms of equitably investing in low-income energy efficiency programs — and several states are improving their performance as policy changes emerge in response to the concerns of advocacy groups.,” says Ben Stacey.

Reames and Stacey hope to impact states’ home energy affordability gap by helping utilities and states make more equitable program investments. They have begun sharing preliminary results with colleagues and organizations across the nation. And in one recent brief, Reames’ research team also examined water affordability in Detroit.

The researchers believe this work could help guide state policy makers, regulatory agencies, utility decision makers and energy affordability practitioners to determine appropriate levels of investments in low-income programs could be annual energy efficiency portfolios.

“Our hope is that this research will help more equitably direct hundreds of millions of annual residential ratepayer-funded dollars toward the reduction of each state’s severe home energy affordability gap,” says Reames.

More about the project.
signature-verticalThis research is funded by the U-M Poverty Solutions. Research team includes: Dr. Tony Reames (PI), Ben Stacey (Graduate Research Assistant), and Michael Zimmerman (Undergraduate Research Assistant)

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