ANN ARBOR – A recent University of Michigan study says the state’s energy efficiency programs are meeting legislative objectives, but are not providing equal benefits to those in low-income households compared to those in higher-income households.
The study, from the Urban Energy Justice Lab at the University of Michigan, said on average nationally low-income households are less energy efficient. This contributes to one in three such households struggling to afford energy and one in five households facing decisions between energy use and purchase of items such as food or medicine.
In the study, the focus was on measuring social equity in Michigan through its Energy Waste Reduction programs through the state’s two large investor-owned utilities.
“State policies providing residential energy efficiency programs have emerged over the past decade with the goal of producing widespread economic and environmental benefits,” the study states. “While those policies have largely achieved and surpassed legislated objectives, the degree to which program benefits are distributed amongst population subgroups, particularly low-income residents, remains unclear.”
The study measures what it calls an “Energy Efficiency Equitable baseline” to outline disparities between program investments and household energy savings on a per capita basis between low-income households and higher income households.
On average, the study found that the state’s two major investor-owned utilities – DTE Energy and Consumers Energy — invested about three times less on low-income electric programs per capita and investment was near an equitable level for low-income gas programs.
Overall, the study showed that low-income consumers received about 9.7 times less in electric home energy savings and about 3.4 times less in gas home energy savings compared to higher-income consumers.
The residential customer class in Michigan is about 9.7 million people, with about 3.4 million qualifying as low-income.
Between 2010 and 2016, the two utilities invested $397 million in Energy Waste Reduction residential electrical programs, with $58.7 million of that total being toward low-income households. For gas programs, the total investment by the two utilities was $299 million, with $100 million being low-income household investment.
When comparing actual investment levels for low-income programs, a deficit for low-income program investments of $73.4 million for electric programs was identified and a $1 million deficit for gas program investments was identified.
Results showed that for Energy Waste Reduction residential electricity programs overall, the two major utilities invested about 3.1 times as much money per capita for higher income household programs. For gas programs, the investment was about 1.04 times greater per capita for higher-income household programs.
The study makes four recommendations:
- Establish investment standards for low-income programs that reflect the Energy Efficiency Equitable baseline tailored spatial and socioeconomic approach for each utility,
- Set a ceiling for inequitable policy outcomes such as a maximum ratio of household energy savings benefits per capita, resulting from high and low-income programs,
- Develop further metrics for current state policy requiring the Public Service Commission to approve or reject proposed Energy Waste Reduction plans based upon availability, affordability and usefulness, and
- Create low-income specific cost-benefit measures that capture the full social benefits of reducing severe home energy burdens. These could include non-energy impacts including health, employment, education and safety.T
This story was published in Gongwer News Service.