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Energy Efficiency as a Tool to Increase Electricity Affordability

Energy efficiency is so often discussed as a way to mitigate an exploding utility-scale power load and address issues like reliability and preventing the worst of emissions from electricity generation. However, the affordability of energy to customers might be the most important aspect of wide-scale energy efficiency practices-- especially when addressing the lower-income households who not only are already paying a higher percentage of their income to keep the lights on but also cannot as easily afford energy efficiency upgrades. 

 

Joseph Daniel with the Union of Concerned Scientists recently published a blog post that dives deeper into this idea, highlighting the reasons utilities should care about energy efficiency-- and thus affordability-- of their customers, particularly those who are disadvantaged. 

When first looking at the map to compare electricity rates across different U.S. states, Daniel quickly points out that "Rates don’t reflect how much energy the average customer consumes. Bills, on the other hand, are what households pay every month."

 

And these bills are where utilities (and their customers) can really drill into how affordable electricity is. One key finding to this analysis is that "somewhat unintuitively, bills are comparatively lower in many of the “high rates” states. Meanwhile, the “low rates” southeastern states begin to look expensive" Just compare the below map with the one above:

  • Massachusetts has 4th highest rates but 36th lowest bills
  • California has 7th highest rates but 15th lowest bills
  • Louisiana has 15th lowest rates but 10th highest bills

So what gives? Turns out, the states that have the lowest bills are the ones that rank the best in terms of energy efficiency (quantified by the ACEEE). Even more troubling is when you compare these high energy bills and low efficiency performance with average levels of income, which gives you energy burden (% of one's income spent on energy):

 

Daniel's takeaway from this analysis is as follows:

"Energy efficiency is a great step in making electricity more affordable. Energy efficiency helps avoid or defer expensive investments that utilities would otherwise have to make, which means it helps all customers save money. Energy efficiency helps consumers lower their bills. And, energy efficiency policies and programs can target efforts to make sure that all consumer groups can benefit and participate in efficiency programs."

So what do you take away from this? Is Daniel's focus on efficiency offering a real solution to affordability of energy? Or should utilities simply focus on decreasing the cost of generation and T&D?

Matt Chester's picture

Thank Matt for the Post!

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