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MD Could Deliver Annual Energy $ Savings to Most Burdened

The General Assembly in my home state of Maryland is poised to act on important and overdue legislation to extend the benefits of our nation-leading energy efficiency portfolio (Maryland, along with 25 other states, has an energy  efficiency resource standard or EERS which includes a portfolio of programs run by electric utilities and a state agency to deliver services to residents and businesses) so it’s more equitable. While grappling with the spread of the Coronavirus may delay consideration, it appears this important legislation has a good chance of consideration this year.

Specifically, Delegate Lorig Charkoudian and 20 House bill cosponsors are collaborating with Senator Brian Feldman to amend the law underpinning the portfolio. Their bills, which you can read all about here, guarantee that at long last Maryland delivers the many benefits of energy efficiency to hundreds of thousands of low-income people, where an unfairly large share of the energy-cost burden falls.

The fact that champions in the Assembly are mobilizing to relieve energy burdens (the percentage of household income spent on energy bills) on under-resourced Marylanders underscores how blessed we are with solid leadership in my state. That applies not just to our legislature, but also state agencies whose mission is to protect the rights of citizens and consumers and provide critical services to the most vulnerable Marylanders. And when it comes to lowering the energy burden for low-income Marylanders, two of the most important are the Office of People’s Counsel (OPC) and the Department of Housing and Community Development (DHCD).

OPC recently released an important report that helps us better understand the energy affordability challenges that low-income Maryland households face and the need for the state to set a clear goal for easing their energy burden through energy efficiency upgrades such as more insulation, better lighting, and tighter windows. (View the whole report.)

The authors find that more than one-fifth of our population, or 450,000 households, qualify as low-income in our state. While the majority of them live in the Baltimore and Washington metropolitan areas, at least 25 percent of households in the more rural Eastern Shore and Western counties are low-income. In other words: Energy costs weigh on low-income Marylanders in both urban and rural areas of our state.

Just ask Greg Shook. The Hagerstown, Maryland, resident lives in the Bradford Apartments, which recently underwent energy efficiency upgrades funded by Maryland’s Multifamily Energy Efficiency and Housing Affordability (MEEHA) Program. Shook says,

“Energy efficiency is crucial so the light bill is not through the roof…People are counting pennies.”

ENERGY EFFICIENCY FOR ALL VIDEO

Now, Mr. Shook and hundreds of his fellow residents will see their electric bills reduced thanks to lighting retrofits, new insulation and windows, and other improvements.

How high is the energy burden—the percentage of the average household budget burned up by energy costs—for America’s low-income consumers? The threshold for a high energy burden is 6 percent, and Maryland exceeds this threshold:

“[T]he average annual energy burden for low-income households is 13 percent, compared to 2 percent for non-low-income households. Within the low-income market, households that have very low-income have an average energy burden of 42 percent, whereas households, at the upper low-income range have an average energy burden of 8 percent...Despite having lower energy bills, energy burden is highest among older households without children and elderly individual households.”

APPRISE REPORT

How much progress is Maryland making in easing this burden? Not enough, as per the new report: “Excluding multifamily housing, DHCD served 9 percent of income-eligible households from 2010 to 2017 and served 6 percent of income-eligible households when including multifamily housing.”(APPRISE report, p. 13) Setting aside the question of what “served” means (retrofit jobs that can range from simple lightbulb switch-outs to whole-building improvement projects), at this rate it would take more than 130 years to serve 100 percent of Maryland’s current low-income households.

This is unacceptable for three reasons. First, it hamstrings these households in the race of life, which requires an adequate budget for daily necessities such as food and clothing but also educational and health costs for children and the elderly.

Second, Maryland can speed up the pace of improving this particular type of housing stock. The Maryland Department of Housing & Community Development is the agency responsible for this work, using its Low-Income Energy Efficiency Program and the MEEHA program as vehicles for delivering needed services, from insulation and hot water improvements to window and lighting retrofits.

DHCD as low-income program administrator gives Maryland a leg up over other states, where utilities manage these programs. DHCD’s mission is explicit about helping low-income households, especially renters.

As the American Council for an Energy Efficient Economy noted in an assessment of DHCD’s programs a couple of years ago, the agency is in an elite position among program administrators: “LIEEP and MEEHA are among a very small number of programs across the nation that tie incentives for comprehensive energy efficiency upgrades with requirements for keeping rents affordable for those with low incomes.”

Lastly, Maryland electric utilities have been improving the rest of Maryland’s housing stock faster, helping slash energy bills for homes like mine here in College Park. In 2015 the Public Service Commission (PSC) ordered that Maryland electric utilities ramp up to a yearly electricity retail-sale savings of 2 percent overall, catapulting the state as a national leader in energy efficiency. This savings rate was then enacted as the law in 2017, extending the requirement through 2023. With these performance goals in place, our utilities have advanced and developed energy efficiency programs that are delivering economic, energy system, and public health benefits statewide.

By contrast, there is no energy efficiency goal for the low-income households most in need of energy savings. This is not a new problem. More than 4 years ago, NRDC and our allies argued in a low-income working group—tasked by the PSC with tackling this issue—that a goal is needed. We wrote at the time “…[T]he Responding Parties recommend at this time that the Commission establish a limited-income annual electric savings goal by utility of 1 percent of the annual load of the limited-income sector, and a corresponding natural gas savings goal by utility of 0.5 percent of the annual limited-income sector gas use.”

We have lost 4 years during which regulated entities could have expanded and improved programs to deliver a fair share of housing improvements and energy savings to low-income consumers.

The good news is that 2020 can be the year for Maryland to adopt a commonsense goal. Delegate Lorig Charkoudian and the 20 cosponsors are championing a bill—HB 982—that would codify a 1-percent performance goal for DHCD through 2023. And Senator Brian Feldman is leading the way in Maryland’s other chamber with SB 740. The allies that have long advocated for this policy to make Maryland’s nation-leading energy efficiency portfolio more equitable continue to back this legislation: The National Housing Trust, the National Consumer Law Center, the Maryland Building Performance Association, the Green and Healthy Homes Initiative, and the Office of People’s Counsel have all joined NRDC in support.

Maryland’s General Assembly and governor must act now, so 2020 marks the year when we get serious about delivering energy efficiency services and energy bill relief to the Marylanders who need it most. We have high hopes that this year Maryland, a national leader in energy efficiency policy, will choose again to lead the pack by adopting a clear goal and a model for delivering energy efficiency for all.

 

Deron Lovaas's picture

Thank Deron for the Post!

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Matt Chester's picture
Matt Chester on Mar 16, 2020 9:32 pm GMT

The authors find that more than one-fifth of our population, or 450,000 households, qualify as low-income in our state. While the majority of them live in the Baltimore and Washington metropolitan areas, at least 25 percent of households in the more rural Eastern Shore and Western counties are low-income. In other words: Energy costs weigh on low-income Marylanders in both urban and rural areas of our state.

I think these facts ring true across the entire country-- those for whom energy costs make up a greater portion of their monthly budgets desperately want relief that EE programs can bring, but expecting them to afford the capital costs that are often required is unrealistic. These types of programs must be a pillar of the utility industry in all states. 

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