The compelling case for getting super-efficient products into lower income households
The State of California is getting serious about clean energy for all — including energy efficient end-use devices, such as TVs and appliances.
Since last Fall, when we laid out our case for the California Energy Commission (CEC) to include in its Low-Income Barriers Study  a dedicated discussion of plug load & appliance efficiency barriers and solutions, address critical data-related barriers that have hampered plug load & appliance efficiency advances in the past and implement behavioral interventions to overcome barriers and drive efficiency, the discussion has advanced significantly.
The Energy Commission recommended in December 2016 that the Legislature ensure that low-income persons have product selection options and information necessary to avoid driving up their plug-load energy use.
Empowered low-income customers. This is a radical conceptual leap from existing low-income rate discount and energy savings assistance programs, with great potential to benefit all ratepayers.
In 2017 alone, ratepayers are footing the bill for $1.28 billion in electricity and gas rate discounts and $372 million in free energy efficiency measures and energy education (a statutory “public purpose program surcharge” to fund these programs appears on monthly utility bills) . Although there are circumstances when bill subsidies are needed to avoid hardship, subsidies don’t tackle the root causes of energy burden and may contribute to energy waste. The existing direct install low-income program provides some efficient end-use devices, but far more can be done.
So what would a market-based program to empower low-income households to shop energy-smart look like?
I recently had the opportunity to share my vision at the 2017 IEPR Joint Agency Workshop on SB 350 Low-Income Barriers Study Implementation, which was held on 1 August 2017.
In addressing the California Energy and Public Utilities Commissioners, I focused on the opportunity to leverage utility-branded online marketplaces — and the consumer product market intelligence and behavioral insights they generate — to remove barriers and modernize low-income programs.
This approach was advanced significantly when the California Public Utilities Commission (CPUC) instructed all utilities under its authority to operate online marketplaces that include energy management technologies by the Fourth Quarter of 2017  — and directed them to help customers with bill payment issues understand the relevant product information that would be obtained there (product pricing, product rebates available, savings estimates for the products, customer reviews…).
Low-income programs delivered via online marketplaces are poised to offer great value to low-income households & disadvantaged communities, ratepayers and society as a whole, because they:
By expanding the universe of plug load & appliance categories addressed, adopting market-based and behavioral strategies and using data to target marketing and incentives for greatest impact, utility-branded online marketplaces can scale participation and improve low-income program cost-effectiveness.
Enervee data on the online retail prices and consumption of the most efficient products currently on the market, coupled with assumptions about an illustrative program design, show that targeting low-income customers with higher incentives on super-efficient products with Enervee Scores 90+ (roughly corresponding to product models at the 10th percentile and below in terms of energy consumption) can have the following benefits :
These calculations show some great justification for investing in online marketplace incentives that will get super-efficient products scoring 90+ into low-income households.
If we assume that a third of all incentives projected statewide based on current marketplace performance fall under a dedicated low-income scheme — with incentives high enough to limit customer co-investment requirements to $137 per product purchase, on average (ranging from zero for LED replacement bulbs to $273 for gas water heaters) — the program cost (net of marketplace revenues) would be only in the tens of millions of dollars, a small fraction of the annual $370 million Energy Savings Assistance program budget. Such a program would deliver hundreds of GWh in electricity (and hundreds of thousands of tons of greenhouse gas) savings annually, while at the same time reducing CARE budget requirements by a factor of nearly 2:1.
Public purpose program surcharges and monthly utility bills would be reduced, with more channeled into productive efficiency investments and less required to fund CARE subsidies.
One immediate opportunity to pilot the approach suggested above of offering higher incentives on super-efficient products for qualified households is within the context of the San Joaquin Valley proceeding. Enervee is ready to work with the CPUC to help communities estimate the benefits of solar plus super-efficient appliances, so that they may consider alternatives to building out expensive gas infrastructure, as well as with utilities to design and implement effective incentive programs.
Utilities should be encouraged to make full use of their online marketplaces to better serve income-constrained households and scale the associated energy and carbon savings. Integrating the avoided cost of bill subsidies in the cost-effectiveness framework across residential programs or performance based incentives for reducing CARE subsidy requirements through special low-income incentives offered via the marketplace would create the right incentives.
They should not have to wait for the next CARE/ESA cycle to begin experimenting, and should be encouraged to do so, in the context of SB 350 and AB 793.
There is great potential to deliver benefits to low-income households, the energy system and society at large — by implementing digital, market-based programs that incentivize super-efficient product purchases and nudge consumers towards them.
 Senate Bill 350 Low-Income Barriers Study, Part A
 CARE & ESA Programs Fact Sheet. In 2016, there were an estimated 5,394,416 eligible CARE rate customers, against the 2017 ESA treatment goal of 274,855 households. The Family Electric Rate Assistance (FERA) program applies a 12% discount on electricity bills for households between 200 and 250% of the Federal poverty guidelines.
 The CPUC issued Resolution E-4820 to implement Assembly Bill 793.
 Even within a specific size class, we’ve documented a 4-fold range in consumption.
 2016 Low-Income Needs Assessment banner tables from telephone survey
 NPD Group 2017. Major Home Appliances See Online Channel Growth
 Based on Enervee comments on empowering low-income households to manage their energy (17-IEPR-08), including updated estimates of grid benefits.
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