Energy Efficiency is a Part of the Solution – Let’s Make Sure We Use it

April 1, 2020

  • In our current COVID-19 world, energy efficiency and demand management efforts can be a part of the solution.  The focus should shift to not only prioritizing low income customers as we have done traditionally, but also broadening the tent to help newly-displaced workers in these uncertain times.
  • Policy makers and regulators must help by adjusting metrics for both cost effectiveness and energy savings to incent program administrators to target the newly-displaced population. This would be a win-win for the energy efficiency industry, customers, and the public good.

As the world reels from the impact of COVID-19, it is critical that policymakers and politicians pursue measures to support our communities. The energy industry is an essential service for Americans and a key actor that will help us recover from this crisis. Utilities across the country have already discontinued service shutoffs for bill non-payment and begun several other measures designed to ensure that an acute pain of COVID-19 is mitigated for customers, and more immediate utility action will be seen in the days and weeks to come.

As our focus shifts from the short to medium- and long-term, energy efficiency and demand management programs are a key lever that utilities and policymakers can use to deliver benefits directly to where they are needed most. Using energy efficiency efforts to support Americans in need is not a new concept; in response to the 2008 recession, the American Recovery & Reinvestment Act supported weatherization of more than one million homes through the Department of Energy’s Weatherization Assistance Program, delivering millions of dollars in bill savings to low-income Americans.

Over the past few decades, program administrators across the US have made broad investments in energy efficiency – both to meet applicable policy goals but also to strengthen their communities and customer bases. Program administrators, regulators, and other policymakers recognize the diverse set of goals energy efficiency supports. While the obvious objectives – enhancing the reliability of the distribution system, reducing greenhouse gas emissions, and helping to decrease energy costs – stand out, energy efficiency has supported more than just these goals. Programs operated across the country also help to assist vibrant small business communities, develop and support a clean energy economy, and support our most vulnerable citizens by decreasing their energy burden, working toward a world where no customer has to choose whether to pay their energy bill or spend their limited dollars on something else.

Recognizing the massive energy savings opportunities as well as the pressing humanitarian need, state regulators and utilities across the country have made serving low income customers a focal point of their program portfolios and policies. Opinion Dynamics has worked with many program administrators, including Ameren Illinois and Dominion Energy South Carolina, who devote significant effort to serving their most vulnerable customers. Undoubtedly, lowering utility bills provides much-needed relief to low-income families. Beyond energy savings, however, low income programs also have proven capacity to provide myriad non-energy benefits, such as improved thermal comfort, avoided hospital bills due to poor indoor air quality, and fewer missed days of work or school.

While delivering energy savings and non-energy benefits to low income communities has always been a high priority for many program administrators, the direct delivery of benefits from DSM portfolios to struggling customers will become even more important in the post-COVID-19 world. Recent research indicates that 9% of working Americans have already been laid off due to COVID-19, and more than 25% have had their hours reduced – shocking numbers that will only grow in the coming weeks. Low income families are not the only ones who will be hit hardest by the crisis, but COVID-19 will also cause millions more to struggle financially. Unemployment claims reached 3.2 million this past week – more than four times the previous record set during the early 1980s recession or claims during the Great Recession in the mid-2000s, and layoffs or reductions in hours are touching a broad swath of Americans, not only those who would traditionally be considered to be low income.

In the face of these staggering numbers, there is a pressing need to adapt our existing low income programs to a broader base to help everyday Americans weather this storm. We can shift the focus of energy efficiency programs to deliver benefits not only to existing low income customers, but also to newly displaced workers. Energy efficiency can serve as a critical relief value for these customers if we are able to adjust quickly. Considering how to adapt our traditional metrics for success in the face of these unprecedented events should be an immediate priority for all of us in the energy space – whether it be re-examining our current frameworks for cost-effectiveness to include non-energy impacts such as job creation, or considering entirely new metrics for success such as ability to deliver benefits to customers rapidly. Policymakers and regulators should not miss the opportunity to use their platforms to rapidly drive meaningful change and allow energy efficiency to play a key role in supporting our recovery. Now is the time to prioritize the public good – not just statutory targets.