The Just Solution Collective presents, “Energy Burden and the Clean Energy Transition”, a three-part blog series that addresses energy burden reduction as an important part of the clean energy transition for environmental justice and climate justice. Through this blog series, we will highlight key elements from our latest report and spotlight justice-centered policy & program solutions to address the issue while our nation considers changes to the energy sector.
In our first blog of the series, we explored the impact of energy burden on households, health, and the environment. Our second blog of the blog series highlights challenges and solutions to addressing the energy burden as identified by experts in the field. The third and final part of the blog series will explore existing programs and policies that work well to address energy burden and examples of efficient energy assistance programs in Maryland, Minnesota, and Washington. The state program examples approach energy assistance in different ways, statutory mandates to target Low Moderate Income (LMI) households, an expansion of eligibility requirements to support more households during the COVID-19 pandemic, and commitments to electricity supply free of greenhouse gas emissions.
Besides LIHEAP, there are a variety of energy assistance programs and policies that experts believe work well. It is important to note that states and regions differ in their administration of energy assistance programs depending on funding and political prioritization.
Percentage of Income Payment Plan (PIPP)
Percentage of Income Payment Plan (PIPP) is a payment plan where customers pay a portion of their monthly bill based on their income. Overall experts were in support of PIPP, they believe it aligns with affordability and explicitly tries to reduce the energy burden to a reasonable level. According to practitioners, PIPP is the most “workable”, it is a model that works better than giving a “flat discount” to people regardless of how much they make because it adjusts to their energy bills and their energy burden. Only a few states administer PIPP, this includes Ohio, Colorado, Illinois, Pennsylvania, Maine, Nevada, Virginia, and New Jersey, while other states have tried to implement similar programs.
Although PIPP programs are favored by our experts, they shared the following concerns about the program:
- People still struggle to pay their bills on time, whether they get unexpected bills or expenses, it is still difficult for people to make ends meet.
- PIPP’s are generally oriented to limiting the household energy costs to a certain, pre-defined affordable percentage of income, typically 6%. Although 6% is a common percentage used for the PIPP program, Nevada runs a PIPP program where the benefit level is not set to 6%. Nevada’s agency that delivers their program is required to calculate yearly what the home energy burden of the median income households is, which fluctuates every year between 2%-3%.
- According to a national policy advocate, for PIPP to succeed, it must operate comprehensively with an arrearage management program component. They believe PIPP should be combined with arrearage forgiveness, arrearage retirement, or an arrearage management program model that does not add to the affordability challenges of the program participant. If a customer enters a PIPP that has a due balance, through the remaining PIPP payment, a percentage of the amount is retired each month. If a customer has a PIPP that limits payment to a certain percentage of income and loads repayment of past due balance it puts people back to a less affordability range.
- PIPP benefit is set for low income to be the same as the energy burden experienced by the median income households. However, the challenge is that if the program were to serve all income-eligible utility consumers, the program cost will be high.
State by State Programs
Maryland. The Maryland Public Service Commission adopted regulations for a Community Solar Pilot Program in Maryland. It emphasized providing renewable energy benefits for low and moderate-income customers. The seven-year community solar pilot program will include providing access to solar-generated electricity for all Maryland customers without requiring property ownership, incentivizing solar companies to provide service to low- and moderate-income customers, and allowing renters to contract for solar energy with the same benefits as rooftop owners (1).
The Public Service Commission ensured that statutorily a pilot program, for each of the companies that were approved, has to target and include LMI customers. The Maryland Community Solar Program is an example where the program specifically mandated that the public commission had to set up specific LMI targets.
The State of Maryland does not have a PIPP program so policy and energy assistance practitioners have packaged a variety of programs together to support households. Programs include the Office of Home Energy Program, Electric Universal Service Program, EmPOWER Maryland, Critical Medical Needs Program, and the Community Solar Pilot Program. For more information on each program please see Appendix C on the report, “List of existing programs & policies that work well”.
Minnesota. In 2021, the Minnesota Department of Commerce, which operates the Energy Assistance Program, received over $130 million in federal funding to help more households during the COVID-19 pandemic (2). The Energy Assistance Program helps households pay for current and past-due bills for electricity, gas, oil, biofuel, and propane, emergency fuel delivery, and repair/replacement of homeowners’ broken heating systems, and could also cover water and sewer bills.
Due to the COVID-19 pandemic, the Minnesota Department of Commerce changed the income guidelines to capture more people who need help. Commerce raised the income eligibility limit to 60% of Minnesota’s median income levels ($67,765 per year for a family of four) and increased benefit amounts to reduce energy burdens by including up to $1,600 for energy bills, plus up to $1,200 for past-due energy bills.
With these changes, the Minnesota Department of Commerce reported that over 600,000 Minnesota households are income-eligible for Energy Assistance. During the previous program year (October 2020-September 2021), about 116,000 Minnesota households applied and qualified for Energy Assistance (3). Carmen Carruthers from the Citizens Utility Board of Minnesota shared that they were “very proactive and made some smart moves related to assistance”. They also extended the application deadline, typically households have to apply by May 31st but it was extended to September 1st of 2021.
Washington. On May 7, 2019, Governor Jay Inslee signed into law the Clean Energy Transformation Act (CETA)(4), which commits Washington to an electricity supply free of greenhouse gas emissions by 2045. The law provides safeguards to maintain affordable rates and reliable service. It also requires an equitable distribution of the benefits from the transition to clean energy for all utility customers and adds and expands energy assistance programs for low-income customers.
Interviewees who work in Washington believe CETA is a great legislative policy and framework for thinking about energy assistance. Hassan Shaban from Empower Dataworks believes it works well because it sets a clear goal for utilities while also giving them flexibility on how they can achieve their goal. He states, “if you try to prescribe every step of a program for utilities, it’s not going to work. Every utility has different customers and service territories but you can set a common goal in terms of energy burden”.
Interviewees from our report also shared the importance of ensuring good implementation of the policy. As utilities are trying to interpret their equity obligations, therefore, public stakeholder processing for commenting on regulatory proceedings. Mariel Thuraisingham from Front and Centered, the coalition that helped to write, pass and implement CETA shared that it is important for utilities to show that highly impacted communities and vulnerable populations are considered, prioritized, receiving benefits from, and not being burdened by higher costs and risks associated with the transition to 100% clean in Washington.
Who is Responsible?
Addressing and ultimately eradicating the energy burden is a shared responsibility amongst state agencies and multiple stakeholders. Key players include government agencies and state legislators, utilities and utility regulators, fossil fuel industries, Community Action Program (CAP) agencies, and society as a whole. Government agencies and state legislators were identified as responsible because they pass policies and mandates for industries and utilities. Utilities and utility regulators are responsible because they create and control rates and energy programs. Fossil fuel industries also have a responsibility in addressing past harms to the environment and communities. Community action programs (CAP) and community-based organizations were identified as key players because they administer energy assistance programs and conduct outreach, provide education, and have a mission to support low-income communities. Lastly, most experts emphasized that energy is a public matter, therefore our society as a whole is responsible for ensuring people have access to such a vital resource.
It is evident that without explicit action, low- and moderate-income (LMI) households and communities of color are likely to face increased energy burdens during the transition to a clean energy system. Although states and regions differ in their administration of energy assistance programs, depending on program funding and political prioritization, a variation that is highly problematic, there are common national challenges and barriers in addressing the energy burden as identified by experts in the field. These challenges include the lack of upfront costs by LMI households to transition into energy efficiency and the lack of funding for programs, inefficient program designs, administrative and participation barriers, lack of renter participation, and limits of our currency utility models.
With adequate analysis and targeted programs and policies for LMI households, the energy transition is an opportunity to invest in reducing energy burdens systematically. Addressing and ultimately eradicating the energy burden should be a shared responsibility amongst state agencies and multiple stakeholders. Solutions and recommendations to address energy burden during the transition to clean energy include increasing funding and program investments for LMI households, improving program and policy design that explicitly address energy burden, increasing program participation, creating more efficient buildings and support for renters, and improving utility rates and targeting of programs. A solution that was uplifted the most by experts is the adoption of community-owned energy and community solar policies. If designed right, the benefits of community solar can be the most accessible LMI households. This includes strong policies with requirements placed on the utility companies to interconnect those systems to the grid without exorbitant cost or administrative burdens placed on community-based organizations, nonprofit or cooperative solar developers. According to the interviewees, these solutions and recommendations will help the effectiveness of policies and energy assistance programs as we transition to clean energy.
Given the low participation rates in energy assistance programs, further research is needed to evaluate the effectiveness of energy assistance programs like LIHEAP to then move towards designing policies and programs that promote a targeted reduction of energy burden with long-term impacts on LMI households.
On March 31, 2022, Just Solutions Collective hosted a webinar sharing key findings from our “Energy Burden and the Clean Transition” report including a panel of practitioners and experts in the field. You can find the recording of the webinar here (the password is 6C5=Nd0D). Read the full report here.
- “Community Solar Pilot Program.” Electricity, Maryland Public Service Commission, 23 June 2020, https://www.psc.state.md.us/electricity/community-solar-pilot-program/.
- “Minnesota’s Energy Assistance Program Expands to Offer More Benefits, Cold Weather Rule Protections Start Earlier.” Minnesota.gov, Minnesota Department of Commerce, 27 Sept. 2021, https://mn.gov/commerce/media/news/?id=17-500590.
- “CLEAN ENERGY–ELECTRIC UTILITIES–VARIOUS PROVISIONS.” Lawfilesext.leg.wa.gov, State of Washington, 13 May 2019, https://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Senate%20Bills/5354-S.pdf?q=20220225221526.