Why Maryland Needs a Goal for Low-Income Energy Efficiency

My home state of Maryland is blessed with solid leadership, especially at state agencies whose mission is to protect the rights of citizens and consumers and provide critical services to the most vulnerable Marylanders. 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 low-income Maryland households face and the need for Maryland to set a clear goal for easing their energy burden through energy efficiency upgrades. (Read the full report.)

The authors find that more than one-fifth of our population, or 450,000 households, qualified as low-income in our state. While the majority of these households are 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. Energy costs weigh on low-income Marylanders in both urban and rural areas of Maryland.

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 Improvement 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 low-income consumers? The threshold for a high energy burden is 6%, and Maryland exceeds this threshold:

“[T]he average annual energy burden for low-income households is 13%, compared to 2% for non-low-income households. Within the low-income market, households that have very low-income have an average energy burden of 42%, whereas households, at the upper low-income range have an average energy burden of 8%...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% of income-eligible households from 2010 to 2017 and served 6% 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% 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 housing stock. The Maryland Department of Housing & Community Development (DHCD) 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 ordered that Maryland electric utilities ramp up to a per-annum electricity savings of two percent, 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 three 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% of the annual load of the limited-income sector, and a corresponding natural gas savings goal by utility of 0.5% of the annual limited-income sector gas use.”

We have lost three 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 2019 can be the year for Maryland to adopt a commonsense goal. A low-income working group is once again tasked by the PSC with recommending a low-income savings goal by April 15^th. NRDC and OPC are at the table, and a set of other groups—American Council for an Energy Efficient Economy, Green & Health Homes, National Consumer Law Center, NEI and National Housing Trust—have joined us in making the case for saving energy in low-income households at the rate of one percent per year.

We have high hopes that this year Maryland, a national leader in energy efficiency policy, will choose to lead the pack by adopting a clear goal and a model for delivering energy efficiency for all.