WARD LENZ: Helping households keep the lights on, now and later

Posted July 30, 2020 5:00 a.m. EDT
Updated July 30, 2020 6:03 a.m. EDT

EDITOR'S NOTE: Ward Lenz is acting executive director of the North Carolina Sustainable Energy Association, a non-profit organization that drives public policy and market development for clean energy in the state. For more information, click here.

With more than 800,000 North Carolinians claiming unemployment benefits, significant numbers of households are making very difficult choices in order to pay for essential needs -- including their electric bill. To provide some level of relief, Gov. Roy Cooper issued and later extended a statewide order to suspend utility disconnections and late payment fees, so no one would go without electricity or water. When that order expires at the end of this month, utilities run by local governments or cooperatives will be able to disconnect thousands of households that are behind on payments.

Children are returning to school using online learning and many adults continue to rely on home electricity service to perform their jobs. Perhaps even more importantly, the intense heat of North Carolina summers seems to last longer and longer each year—in Raleigh, the hottest day last year was October 3.

As of last month, households in North Carolina were cumulatively $253 million behind in payments. Hundreds of thousands of our relatives, friends and neighbors will be unable to pay their past-due bills, keep the lights on, attend online schools and cool their homes. Wednesday’s action by the state Utilities Commission will effectively extend the shutoff moratorium until Sept. 1 for those served by investor-owned utilities – mainly Duke Energy and Dominion Energy. The order also allows those customers up to 12 months to make the repayments. The commission’s order does not cover the more than 3 million customers of the state’s energy cooperatives and municipal-owned power systems.

This problem needs both a short and a long-term solution. We’re in crisis mode now, but that doesn’t mean we shouldn’t consider how to address the energy burden many North Carolinians face, pandemic or not. At the North Carolina Sustainable Energy Association we have been examining this very issue as part of the North Carolina Department of Environmental Quality’s Clean Energy Plan process.  With our partners at the Environmental Defense Fund and Sierra Club, we are collaborating on tools to help address customer arrearages accumulated during the “no-disconnect” period.  There are surprisingly simple solutions that if implemented, could support newly struggling customers as well as those who those who were having trouble making ends meet long before COVID-19.

Gov. Cooper could encourage the state Utilities Commission to consider inclusive financing mechanisms, such as “tariffed on-bill” financing. Tariffed on-bill is a method of financing that offers a qualified household energy efficiency upgrades without paying an upfront fee. The household, many of which will immediately have lower energy bills than before the upgrades, then pays off the cost of the upgrades in installments (the “tariffed charge”) on their monthly energy bill.  Utilities could then develop energy efficiency and other programs tailored specifically to those households dealing with arrearages, such as using part of the tariffed charge or customer energy savings to address customer unpaid bills. 

Specifically, our association recommends the “Pay As You Save” (PAYS) model, an established system developed by the Energy Efficiency Institute that couples a behind-the-meter utility investment with a tariffed charge assigned to the home so that no loan is involved with the resident. Based on data calculated from existing programs, a home in North Carolina that uses 20,000 kWh per year (a typical inefficient home) can expect to save around $730 annually in a "PAYS" program.  That’s $730 that a household could potentially use to address the debt they owe the utility.

In fact, in our recent partial settlement Duke Energy agreed to explore a number of energy efficiency programs aimed to support low to moderate income households, including a Pay As You Save pilot. This type of innovative policy tool offers much-needed relief to households with large balances owed, easing the stress that comes with unsteady financial footing and shines a light at the end-of-the-tunnel for North Carolinians struggling with debt from unpaid energy bills.  This policy also stimulates job creation and economic development for companies that perform home energy and retrofit services, something desperately needed in these times.

Duke Energy and Dominion Energy will be writing off $3.4 billion in expenses for a pipeline that will not be built. They spent that money to make the use of natural gas easier. Imagine how many fewer households would be facing arrearages if that $3.4 billion had been spent on home energy audits and retrofit services. I venture to say we would be looking at an amount of unpaid bills dramatically lower than the $253 million we are seeing today.

The cleanest and cheapest energy available is that which goes unused. We must take up the opportunity before us to offer immediate relief and long-term solutions for North Carolina’s most economically challenged customers.  During the pandemic and after, the N.C. Sustainable Energy Association will continue to advocate for smart policies that support affordable, accessible, and reliable clean energy for all North Carolinians.

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