Regulators Approve Major Upgrades to California's Largest Low-Income Energy Efficiency Program
Posted August 14, 2014
The California Public Utilities Commission today unanimously adopted significant program enhancements for the state’s largest energy efficiency program dedicated to cutting bills and electricity waste for low-income households. While the program served over 300,000 people last year at an investment of $360 million, huge savings remain untapped.
The Energy Savings Assistance Program (ESA), available since the 1990s at no-cost to customers of California’s large investor-owned utilities who earn less than 200% of the federal poverty guidelines, or $31,460 for a household of two, serves millions of low-income California households with basic energy retrofits, such as efficient lighting and insulation, that save energy and cut utility bills while also improving the comfort and safety of residents’ homes and apartment units.
On average, the program lowers household energy bills by $400 over the life of the efficiency measures, freeing up resources to spend on other household needs. This type of relief is especially welcome to California’s low-income households, who on average spend twice as much of their income on energy bills than higher-income households. For residents making $15,000 or less or living in non-temperate climate zones, the proportion of utility bills to income reaches closer to 20%.
The ESA program also serves as an energy resource for the utilities because saving energy means they don’t have to pay for other resources to generate electricity for their customers. Since 2006, and according to conservative estimates, the program has achieved electricity savings equivalent to powering 80,000 California homes for one year and natural gas savings equivalent to heating approximately 52,000 California homes for one year.
Yet despite the program’s success and growing scale, it has only skimmed the surface of potential energy and bill savings. In 2013, the program served over 225,000 households with electricity measures, but only saved enough electricity to power 13,000 California households for the course of a year. While many measures are primarily directed toward improving the comfort and safety of low-income residents’ homes, the disparity in electricity savings achieved per household relative to the program’s aggressive outreach targets suggests there’s a huge opportunity to save more energy at lower cost.
Renewed Focus on Achieving Deeper Savings
Recognizing the potential for improvement, three years ago the Commission ordered several intensive research reports and working groups to convene, which laid the groundwork for a number of the key recommendations adopted today by the commission, including:
Improved Program Design to Better Serve Multifamily Tenants
Originally designed to serve single-family homes, the ESA program has historically underserved the multifamily sector (housing comprised of four or more units) due to a number of program design barriers. Today’s decision takes several important steps to overcome these barriers:
- It authorizes utilities to develop budgets and propose incentives for new whole-building measures for the multifamily sector, such as heating, cooling, and hot water, in their next three-year program cycle.
- It also orders utilities to improve their outreach to multifamily building owners, who are ultimately responsible for the majority of efficiency investments and have the ability to capture more significant energy savings by installing upgrades to larger, building-wide systems.
Better Cost Evaluation Frameworks to Achieve Deeper Energy and Bill Savings
The decision adopts a new cost-effectiveness framework that evaluates program costs and savings as a whole, as opposed to the level of each individual efficiency measure. This added flexibility will enable program planners to target delivery strategies that better correspond to the energy usage and efficiency attributes of California’s diverse low-income population.
The new framework distinguishes between measures that provide energy savings versus those that primarily provide comfort and safety benefits. This eliminates the problem of allocating program-wide administrative costs and non-energy benefits to individual measures, which had previously resulted in basic weatherization measures such as sealing leaky ducts being excluded.
Streamlined Implementation to Reduce Tenant Burden and Save Money
The decision orders utilities to expedite the program enrollment of low-income multifamily residents by using income data already verified by other agencies. For example, the U.S. Department of Housing and Urban Development already has income data for housing units it subsidizes and has agreed to share this eligibility information with the commission. This will reduce the need to go door-to-door to verify the income of each tenant, which is both burdensome and costly.
The decision increases coordination and leveraging among utility energy efficiency program offerings and other government programs. For example, it orders utilities to coordinate with the State Treasury’s office to receive notice when income-assisted properties are undergoing recapitalization, a major refinancing event that typically occurs every 10 to 15 years and presents a unique opportunity for building owners to finance deeper retrofits.
Encouraging Measures that Save Water and Energy
- To address California’s drought conditions, the decision requires electric utilities to consult with water utilities and to prioritize energy efficiency measures within the low-income assistance program that also save water.
From Decision to Action
Today’s decision sets these important improvements in motion. But it is only the beginning. The utilities now have three months to develop program applications for the next three-year program cycle that incorporate the commission’s directives. The commission and stakeholders then will come together over the course of next year to ensure the program applications appropriately put the commission’s recommendations into action. California’s low-income households deserve nothing less.