Energy Efficiency

Real choices, real savings: Keeping the lights on for low-income customers

More than 40 million people in the United States — 12.7 percent — live in poverty, according to the U.S. Census Bureau’s report, 2016 Income and Poverty in the United States. Living beneath the poverty line means a two-parent family with two children earns less than $16,543 a year. That means many U.S. families are often faced with choosing which necessities to pay for at any given time: food, medications, or electricity.

Low-income customers simply cannot afford to take advantage of opportunities to save on their electric bill by purchasing more-efficient appliances or making improvements to their homes.

“The middle- and upper-level housing market is served well by energy efficiency programs and increases in codes and standards for efficiency,” said Frank Rapley, senior manager for the Tennessee Valley Authority’s EnergyRight Solutions for the Home program. “The problem is, many low-income customers have not seen these benefits because they don’t have money to invest in their homes.”

Many utilities have stepped up to offer financial assistance, rate discounts, or free energy efficiency upgrades. Here’s a look at a few public power programs created to assist low-income customers.

Empowering Customers

Through a grant from the American Public Power Association’s DEED research and development program, Florida’s Gainesville Regional Utilities partnered with the University of Florida to help identify and remove barriers to delivering energy efficiency services to low-income customers. They first identified high-energy intensity areas and the major, most common energy problems among low-income customers. Then, they developed a pilot program, the Low-income Energy Efficiency Program, or LEEP, which provides free energy upgrades to help qualifying customers reduce energy use.

If a customer qualifies for LEEP, a GRU representative walks through his or her home to determine areas that could use improvements, such as the heating, ventilation and air conditioning system, water heater, insulation, duct system, lighting, weather stripping, and caulking around windows and doors. GRU requires the customer to take ownership of making improvements and contacting contractors — who have been vetted by the utility — for estimates. GRU reviews the estimates submitted by the customer, selects the contractor with the best estimate for the proposed work, and sends the customer a voucher for the approved project. When work is completed, the customer signs the voucher stating that he or she is satisfied with the work and sends it back to GRU, which completes a post-work inspection and pays the contractor directly after the inspection is approved.

“Our intention is to educate and empower the customer, teach them to be more efficient, and take ownership and control of their consumption,” said Tara Thomas, GRU’s energy business services manager.

To qualify for the program, a customer must have owned and lived in the home for at least one year, the home must have been built before 1998, and the customer’s name must be on the utility bill. Customers also must meet the U.S. Department of Housing and Urban Development’s Low Income Limit guidelines of 80 percent of the median household income.

“Customers were hesitant in the beginning. They wanted to know ‘what’s the catch,’” recalled Thomas. “They were concerned they would have to give something up to participate. [They] found out there was no catch — they didn’t owe anything.”

Since the program began in 2008, GRU has helped more than 1,500 homeowners make energy efficiency upgrades with an average investment of $4,250 per home. On average, participating customers save 14 percent on their energy bills, and some save as much as 50 percent. The savings aren’t always high because sometimes the upgrades replace broken systems with more efficient systems, which might increase the bill but improve comfort and health. As a result, GRU has received plenty of appreciation from customers.

“On a monthly basis, we receive thank you cards from participants showing their appreciation for what we’ve done for them,” said Thomas. “The community is very supportive of this program.”

The program has benefited the utility as well. It reports fewer disconnects and uncollectibles among low-income customers, in addition to lower energy demand during the summer peak months. The program has also provided an opportunity to educate customers about being energy efficient while maintaining comfort.

Extreme Makeovers for Energy

Stemming from a settlement with the U.S. Environmental Protection Agency, Tennessee Valley Authority started an Extreme Energy Makeover program for low-income customers.

“The program included deep retrofits in low-income homes, and a smaller piece was to test new technologies in homes,” said Rapley. “We wanted to concentrate dollars effectively in communities — helping many more people than we would have otherwise been able to do.”

TVA relied on community agencies to identify homeowners in need of makeovers. Then, they determined what work needed to be done in each home. Work was awarded to local contractors and utility companies through a request for proposal process and included all aspects of weatherization and making the home more efficient, including air sealing, duct sealing, insulation, replacing windows and doors, replacing or repairing HVAC systems, and general repairs.

The program — which ended in September 2017 — worked on 3,420 homes and provided an average savings of nearly 5,000 kilowatt hours per home. The cost of improvements averaged $8,000 to $10,000 per home. In total, the program spent $42 million on the retrofits and upgrades over two years and resulted in an annual savings of nearly 17 million kilowatt-hours.

In addition to saving many families much-needed money on their electric bills, the program provided an opportunity to educate homeowners about reducing energy costs. The educational components of the makeovers were so effective that TVA decided to hold regular workshops to teach residents skills to perform do-it-yourself weatherization techniques.

TVA also established an energy efficiency information exchange with advocacy groups, academics, local power companies, state energy officials, city government officials, and a local public power trade association to determine solutions for low-income families that might be unable to take advantage of energy efficiency practices.

One result of this exchange was a new cloud-based platform to help perform weatherization audits. The technology supports the Tennessee Weatherization Assistance Program, a federal program that provides weatherization assistance to low-income residents. While still in development, the tool has already been used in 200 homes. A final version will be deployed in mid-2018.

One Size Does Not Fit All

Silicon Valley Power’s service territory covers only 19 square miles in California, but within those miles are 55,000 customers, including 46,000 residential customers — half of whom live in multifamily housing units. The area is home to a large transient community with university students, recent immigrants, or people in the country on temporary visas. When determining how to help low-income customers, the utility had to come up with a plan to help renters as well as homeowners.

“It's important to offer programs that can help all of our customers, especially low-income, because electricity is a basic need,” said Mary Medeiros McEnroe, public benefits program manager for Silicon Valley Power. “Low-income customers often do not have the ability to make energy-efficient changes because they are in rental units.”

In 1998, Silicon Valley Power created a program to give all qualifying customers a 25 percent discount on their electric bill. In 2014, the utility capped the discount at the first 800 kWh per month (the average customer was using 500 kWh per month) to prevent waste and encourage energy-efficient practices.

“We didn't want to encourage waste by allowing unlimited use,” said Medeiros McEnroe. “Lots of customers started bringing usage down when we capped the kilowatt-hours — it resulted in a behavior change.”

To help customers using closer to 800 kWh per month, Silicon Valley Power created a direct install program. The utility hired a contractor through a competitive bid process and then reached out to all customers with high energy usage. For participating customers, the contractor installed energy efficiency measures including better attic insulation, new lighting, weatherization, duct testing and sealing at no cost.

“The direct install program allowed us to have personal conversations with each [customer], so we weren’t just making blanket recommendations,” explained Medeiros McEnroe. “We helped them figure out what makes sense for their situation.”

The program ended in 2016, after the utility reached out to all customers reporting high energy usage — ultimately completing $2,000 to $8,000 in work for each of the 53 participating customers.

Funding for the project was the result of Silicon Valley Power’s public benefit charge, which was created when the state passed legislation to deregulate electric utility companies. The legislation added a 2.85 percent charge on customers’ utility bills to be used for programs related to energy efficiency, renewable energy, low-income assistance, and research and development.

Now, the utility is looking for more ways to better serve low-income customers. Utility representatives do free energy audits and community outreach and education. They attend community events to help customers fill out forms to receive the rate discount, and they inform customers about energy-saving tips.

Silicon Valley Power is also developing a program to install electric vehicle charging stations in multifamily housing developments where at least 20 percent of residents qualify for the rate discount.

“The housing developments with more low-income customers are less likely to put EV charging stations in,” Medeiros McEnroe said. “If someone's in the market for a new vehicle, they won't choose an EV if they don't have the ability to charge. We want it to be an option for low-income customers.”

Financing Comprehensive Upgrades

In 2012, the city of Holland, Michigan, began a long-range community energy plan to become a world-class energy-efficient city. As part of the plan, Holland aimed to improve energy efficiency for 7,400 homes by 50 percent by 2050. Holland’s housing stock is less efficient than the state average, and even less efficient compared to the average in the Midwest, according to Anne Saliers, community energy services manager for Holland Board of Public Works.

To help achieve its goal, the public power utility decided to implement an on-bill loan program that would make financing for energy efficiency upgrades available to customers. But on-bill loan programs were not legal for electric utilities in Michigan, so Holland Board of Public Works worked to change the law, and a bill was passed in 2014.

Once the bill passed, the utility created the On-Bill Loan Program, which offers long-term financing options to customers who might not qualify for traditional financing because of low credit scores or a high debt-to-income ratio.

To qualify for the program, customers must have 12 months of on-time bill payment history. While the utility does not review customers’ credit scores, it does check to see if any credit discrepancies have occurred in the last three years.

For qualifying customers, the program encourages deep energy retrofits — projects where customers make more holistic upgrades at one time instead of through several small projects over time. The program also allows financing for a broad range of upgrades, including any item in Michigan’s Energy Measures Database, which documents anything with proven energy savings. Customers can make upgrades related to air sealing, energy efficient appliances, improving the building envelope and insulation, and installing efficient HVAC equipment. The program even covers renewable energy upgrades, such as solar panels, if the home has a Department of Energy Home Energy Score of eight or higher.

“A lot of programs only cover certain types of measures, but the more things you can do to your house at one time, the more synergies there are in achieving the energy efficiency savings,” said Saliers.

As a prerequisite to the program, customers must have an authorized contractor perform a comprehensive energy assessment. In addition, a residential energy advisor serves as a coach for homeowners, helping them evaluate their energy use and interpret potential areas of improvement documented in the assessment.

In the first year of the program, Holland Board of Public Works issued 37 loans. Those projects are now complete, and the cost is showing on customers’ energy bills. The average amount financed is more than $13,000 per project, for a total overall investment of more than $500,000. On average, each customer with an on-bill loan completed more than eight measures to become more energy efficient.

In addition to giving homeowners the support needed to make their homes more efficient, the program also helped Holland Board of Public Works connect with customers and raise awareness about energy efficiency.

“Part of our role is to help customers use their utilities wisely. We feel it's a responsibility to provide education and coaching on how they can spend less money and make their home more comfortable,” said Saliers. “There are [also] safety checks with an energy assessment. These upgrades make their home healthier and more comfortable, and they save money. They can spend that money on other things in the community rather than on fuel we have to import from outside of the state.”