A Search for the Win-Win
For the last year, I’ve worked on an evolving team of collaborators from Milepost Consulting, Balzar Energy Solutions, and a variety of partner organizations who were kind enough to lend their ears, experience and wisdom, to address a complex problem plaguing communities across the country: a sustainable solution to reducing the energy burden for low and limited-income homeowners. Like all issues stemming from poverty, it is multi-faceted with many contributing factors and consequences, and the will and resources to solve it are lacking.
Most people don’t understand the difference between social work and therapy/counseling, using the terms interchangeably and assuming one course of study equates with the other. The reality is that therapy/counseling looks toward the person to understand them more deeply – what drives them, what their background is, how they process, their stressors. Social work does all of this, but also looks outside of the immediate person to understand their larger context and how they are affected by their family, their community, our society and our collective history. Social workers ask, “what’s happening at the system level to create or perpetuate the situation?”
So what does this have to do with energy burdens among people struggling to make ends meet? In many communities, low-income energy burdens have been addressed sporadically and at the individual level (the therapy model). Funds are set aside by well-intentioned federal agencies, utilities and non-profits to help people pay for high bills during extreme weather situations (icy winters, scorching summers). When the funds run out, that’s it. High bill complaints turn into debt, which turn into disconnects. If a family is lucky enough to get help with the bill payment, they still have no long-term solution to their problem – the next extreme weather event is going to send them into arrears unless they have a change of fortune in the meantime.
After stepping back to look at the context more broadly, our solution identifies and targets two main culprits that perpetuate high energy burdens for income-eligible customers: unpredictable high bills due to energy inefficient housing and behaviors, and unsustainable financial models for helping struggling customers en masse.
But how did we arrive here? And what did we learn along the way?
My 5 Biggest Lessons Learned:
- In the search for a way to satisfy the needs of diverse stakeholders, we often make perfect the enemy of the good.
It has been fascinating to sit in on conversations with utilities, low-income advocates, city officials and home performance nerds and hear each define their expectations, needs and wishes for a low-income solution. Utilities want the most bang for minimal buck and they want it guaranteed; low-income advocates want utilities to address as many people as possible with the most holistic of investments, no matter the cost; city officials want to be part of the solution, but have no funding to contribute; and home performance nerds want every house to receive a blower door test. Period.
- Understanding the constraints of a utility/region/community are paramount to developing the right solution.
There are myriad utility contexts to navigate – self-regulated, friendly public utility commissions, antagonistic public utility commissions, investor-owned boards – and it’s imperative that the solution be flexible enough to accommodate each. Then there is the regional environment - state efficiency standards? an out-of-touch legislature? a region recently damaged by economic upheaval or a natural disaster? Not to mention the local community’s context, whether that be a contentious mayoral election underway or a dearth of quality local contractors. A solution that doesn’t account for and adapt to these possibilities will never get off the ground.
- Not only do utilities struggle to internalize externalities, silos keep them from internalizing internalities.
Forgive the business school-speak, but this process has made it clearer than ever that many utilities are not accounting for the actual costs of not addressing the issue of energy-burdened low-income customers. Even finding data on disconnects due to unpaid bills, customer arrearages, and debt carried by utilities due to unpaid bills is difficult. It became clear in our conversations that those issues/costs were often not considered when making funding and program design decisions around energy efficiency.
- Spending $1 million on low-income customers is a much larger mental barrier than spending $10 billion on a plant or piece of technology.
For folks who work in non-profits, this insight isn’t that surprising – it speaks to our society’s value judgments and deeply-held beliefs about the poor.
Ultimately, when business executives, accountants and consultants get in a room together, they often decide that investing in a major asset is less risky than investing in low-income people. This is despite research showing that 75% of power plant and transmission projects face cost overruns. The average project, in fact, takes 73.4 months to construct and has a cost overrun of $1 billion. Hydro and nuclear projects performed the worst, with 90% of nuclear plants facing cost overruns.
Comparatively, a comprehensive evaluation of the Department of Energy’s Weatherization Assistance Program showed $340 million in program wide energy-cost savings in 2008 and $1.1 billion in energy-cost savings after the American Recovery and Reinvestment Act expansion. This was in addition to approximately $14,000 in health and household-related non-energy benefits per single family household.
- It takes strong leadership and vision from all parties to make it happen.
This definitely feels obvious, but it can’t be overstated. Addressing an issue this complex requires people to bring their passion and muscle to the table – to find workarounds for the inevitable challenges that pop up, to rally around a shared vision even if sometimes it feels less than ideal, and to commit time, energy and resources to a new initiative.
We’ve had the opportunity to work on a number of low-income initiatives being led by the Tennessee Valley Authority over the last two years, including their seven Smart Communities Extreme Energy Makeovers projects. The level of commitment and collaboration from each project’s team leaders has been key to their success. Whether it was jumping on a last-minute call to figure out how best to handle an unexpected contractor issue, coordinating press releases, or clearing financial hurdles so that implementation teams could leverage funds in innovative ways to serve homeowners more efficiently, folks brought their influence and a whatever-it-takes attitude to the table to make each project a success.
Have you been working to develop a solution to tackle the persistent energy burdens of low and limited-income families in the United States? We’d love to hear about the lessons you’ve learned along the way in the comments.
If you’re interested in learning more about Empower First, our low-income investment solution, please reach out to Luke Gebhard at email@example.com.