Energy Efficiency in Pennsylvania: Cutting Energy Costs, Combating Climate Change, and Creating Jobs

An unusual coalition of businesses and efficiency-minded groups, including NRDC, has written to Pennsylvania Governor Tom Wolf urging him to take steps to ramp up efficiency investments to cut pollution and continue to plan for implementation of the Clean Power Plan (CPP) to limit power plant emissions. Expanding efficiency, through just a few policy changes could, the letter and an accompanying fact sheet note, significantly and cost-effectively reduce air pollution, lower Pennsylvanians' electricity bills, and grow the state's economy. And it could be especially beneficial for the growing number of economically disadvantaged Pennsylvanians if investments are targeted to their communities.

Three energy efficiency opportunities for Pennsylvania

Under the state's main "consumer-side" efficiency law (Act 129) the energy savings goals of Pennsylvania's biggest electric utilities range from 1.6 percent to 5.0 percent, cumulatively, over the next five years. That's respectable - but studies show much deeper savings could be realized if an arbitrary spending limit built into Act 129 is removed. Good efficiency standards in building codes can also result in huge electricity savings - but Pennsylvania's codes are obsolete in terms of efficiency. And combined heat and power, or "CHP" - a catchall term for various technologies that capture and make productive use of "waste heat" from onsite power generation - is underutilized in the Commonwealth.

The coalition letter points out that improving efficiency in just these three areas could, by 2030, save Pennsylvanians $4.7 billion on their electric bills (leaving more money for food, healthcare, education, etc.); curtail carbon pollution from power plants by 20 million tons; and put Pennsylvania 68 percent of way toward its 2030 carbon limit under the Clean Power Plan. These benefits would flow to all Pennsylvanians because pollution doesn't respect neighborhood boundaries and efficiency suppresses electricity prices generally."

Pennsylvania's energy burden

For low-income Pennsylvanians, though, smart state policies could deliver especially important benefits.

According to last year's Home Energy Affordability Gap, Pennsylvania households with incomes below 50 percent of the federal poverty level spend an average of 33 percent of their annual income on home energy bills. Households with incomes between 50 percent and 100 percent of that level spend 18 percent. These are Pennsylvania's poorest citizens, and they constitute a staggering 13 percent of the state's population - some 662,226 households. Households earning between 100 and 185 percent of the federal poverty level -little enough for them to be classified as "economically disadvantaged" - also pay large portions of their income for energy.

Most of these households are renters, not homeowners, and as Matthew Desmond discusses in Evicted: Poverty and Profit in the American City (2016), renters at the bottom of the market sometimes pay more for utilities than those at the top because they can't afford "new construction with thick insulation, double-paned windows, or ENERGY STAR® appliances." Nationwide, Desmond writes, "renting families responsible for utilities with incomes less than $15,000 spend an average of $116 a month on utilities; those with incomes in excess of $75,000 spend $151 a month."

These poor and economically disadvantaged households often must choose between paying rent and utilities. Such households - in both urban and rural areas - account for about a fourth of Pennsylvania's population. And that proportion is growing. In the rural Lancaster County area served by the Pequea Valley School District, the number of economically disadvantaged students has doubled in the last 10 years - from one in every four students to two in four.

As the Pennsylvania Office of the Consumer Advocate noted in comments to the state Department of Environmental Protection (DEP) on how Pennsylvania should implement the Clean Power Plan, the poorest one-quarter of households "lack sufficient income to meet their basic costs. They struggle to meet basic needs and have no additional income for spending on energy efficiency measures."

For some low-income communities - particularly communities of color - these burdens are compounded by the hardship of living near coal-fired power plants. In preparing its Environmental Justice Screening Report for the CPP, the U.S. Environmental Protection Agency examined the population within a three-mile radius of 50 Pennsylvania power plants. It found that 42 percent of the residents are low-income, and 43 percent are people of color (as opposed to 21 percent of the state's overall population).

Bringing energy efficiency to the economically disadvantaged

Energy efficiency can help economically disadvantaged Pennsylvanians by lowering their electricity bills, leaving more money for food, healthcare, and other necessities; improving the affordability of low-income housing; and reducing their exposure to environmental health threats.

Pennsylvania has some good programs to ease the energy burdens on low-income households, ranging from efficiency programs like the Low-Income Usage Reduction Program (LIURP) administered by the Public Utility Commission (PUC) to the Weatherization Assistance Program (WAP) administered by the Department of Community and Economic Development.

But as the Pennsylvania Energy Efficiency for All (EEFA) Coalition pointed out in comments to the DEP last fall, "existing sources of energy assistance are not adequately addressing the Home Energy Affordability Gap" in Pennsylvania. Due to a lack of adequate funding and the unique challenges to increasing efficiency in multi-family affordable housing (e.g., the need to coordinate among building owners, managers, and programs), "in 2014, only 14 percent of income-eligible households actually received assistance."

Pennsylvania's growing recognition of efficiency's benefits

There have been two recent positive developments for energy efficiency in Pennsylvania. On February 25, the Public Utility Commission approved a policy to expand use of CHP (one of the policies mentioned in the coalition letter) by requiring companies that distribute electricity and natural gas to report biennially on "their efforts to eliminate obstacles to the development of CHP in the Commonwealth." And on March 3, the PUC held an en banc hearing on the use of revenue decoupling and other alternative ratemaking methodologies to remove disincentives for energy utilities to pursue aggressive energy efficiency initiatives.

These are exactly the kinds of steps Pennsylvania should be taking, during the current "pause" on Clean Power Plan implementation, and we applaud the PUC for taking them. Now, as the coalition letter states, we urge Governor Wolf (and the General Assembly, the DEP, and the PUC) to continue efforts to maximize efficiency, the Commonwealth's lowest-cost energy resource, and to explore every opportunity for bringing efficiency's benefits to the Commonwealth's most vulnerable citizens.